Thomas Cook is preparing to announce today it is nearing a rescue deal that will include selling off its tour operating arm to the Chinese owner of Club Med.
The package holiday group is set to reveal this morning that it is close to reaching an agreement with Fosun Tourism Group and its lenders which will split up the company as it currently stands.
Sources told Sky News late last night the outline of the restructuring process will see Thomas Cook’s biggest shareholder and its lenders inject hundreds of millions of pounds of new equity and debt into the business.
Fosun would become the majority-owner of Thomas Cook’s tour operating arm while it would also own a minority stake in its airline division.
A string of separate offers for the ailing travel group were insufficient to permit a recapitalisation of the business, the report added.
EU rules on ownership would prevent Fosun from taking full control of Thomas Cook’s airline business.
Bankers told Sky News that the deal under discussion also involved a substantial debt-for-equity swap, which would inevitably dilute the value of existing investors’ shares in Thomas Cook.
Thomas Cook reported a £1.5bn half-year loss in May. Its shares have lost more than 85 per cent of their value in the last year.
Much of its £1.4bn debt pile would be written off and converted into shares as part of the deal, while the new cash would be directed towards the airline division and the newly-sold tour operations arm.
Thomas Cook declined to comment to Sky News last night.