Chinese group Fosun has signed a bailout agreement with British tour operator Thomas Cook, a deal made through a capital increase valued at 750 million pounds (840 million euros).
According to the Financial Times this Friday, July 12, with this injection of money, Fosun, which owns Fidelidade and is the largest shareholder of BCP, will be the majority shareholder of the oldest travel agency in the world that is a period of financial hardship. Thus, Fosun gains control of a business with 11 million customers and reported revenues of 7.4 billion pounds last year.
The Fosun Tourism Group issued a statement detailing the potential business and Thomas Cook pointed out that negotiations are at an advanced stage and that Fosun's capital injection ensures liquidity for the company to operate until next winter (which up to now was not guaranteed).
The deal will be implemented through the conversion of debt into equity and a capital increase. Fosun already held 18% of Thomas Cook's share capital, and the purpose of protecting this stake would have been the main reason for the Chinese to agree to inject more money into the company. Thomas Cook says that this capital injection "will provide enough liquidity to operate in the winter of 2019/2020 and financial flexibility to invest in the business."
The agreement will result in an increase in Fosun's holdings in Europe and significantly dilute the position of current shareholders, which explains the sharp drop in shares of the British stock exchange, which are sinking 46% on the London stock exchange. The daily downturn is the strongest since 2011, plunging the company's market capitalization to just 120 million pounds (134 million euros). Bonds are reacting on an upward trend, with an appreciation of 18%, although the quotation persists at less than half the value at which they were issued.
The company, which is one of China's largest private sector groups, bought the Club Med resort network in 2015 for € 939m and acquired Wolverhampton Wanderers for € 50m in 2016.