China’s Fosun in talks on future of Thomas Cook tour business

Guo Guangchang, the chairman of Fosun International. (Reuters)
Updated 13 July 2019
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China’s Fosun in talks on future of Thomas Cook tour business

  • Proposed deal would be most significant purchase of a British company by a Chinese group in years

HONG KONG: China’s Fosun Tourism Group is in advanced talks with Thomas Cook Group and its lenders regarding a combined £750 million ($940 million) fund-raising by the world’s oldest travel company.
The proposed deal would give Fosun Tourism control of the British firm’s core packaged-tour business and minority interest in its airline business, marking one of the most significant purchases of a British company by a Chinese group in years.
Fosun did not say how much of the money it would inject and how much would come from lenders.
The 178-year-old London-listed company has been battered by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, which deterred bookings. The company is also weighing approaches for its airline business and Nordic operations.
“After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing ... the board has decided to move forward with a plan to recapitalize the business,” Thomas Cook Chief Executive Peter Fankhauser said in a statement.
“While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution.”
Thomas Cook, worth roughly $4 billion after it debuted in June 2007, currently has a market value of about $255 million and has seen its stock more than halve in value so far this year.
The tour business of Thomas Cook had 11 million customers in 2018 and produced 7.4 billion pounds in revenue, while its higher-margin airline business — which includes German holiday carrier Condor — made £3.5 billion in revenue.
Hong Kong-listed Fosun Tourism, owner of the Club Med holiday business brand, is already Thomas Cook’s biggest shareholder with an 18 percent stake.
Thomas Cook’s recapitalization proposal may comprise a capital injection and new financing facilities, Fosun Tourism said in a filing to the Hong Kong stock exchange on Friday.
The news comes a month after Thomas Cook said it was in talks with Fosun, after the Chinese firm made a preliminary approach.

HIGHLIGHTS

• Proposal may comprise capital injection, new financing.

• Fosun does not say how much of the money it will inject.

• Fosun may control Thomas Cook’s core packaged-tour business.

“Fosun is a shareholder in Thomas Cook, because it is a British company operating in the global travel industry, in which we have extensive experience,” Fosun Tourism told Reuters in an email on Friday.
“We are committed investors, with a proven track record of turning around iconic brands including Club Med.”
Thomas Cook’s proposal envisions that a significant amount of its external bank and bond debt will be converted into equity, and that existing Thomas Cook shareholders will have their stakes significantly diluted as a result of the recapitalization.
The proposal is subject to due diligence and further discussion, among other things, Fosun said.


Funds managing $2 trillion urge cement makers to act on climate impact

A general view of Gulf Cement Company in Ghalilah, Ras al Khaimah, United Arab Emirates July 16, 2019. (REUTERS)
Updated 23 July 2019
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Funds managing $2 trillion urge cement makers to act on climate impact

  • The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China

LONDON: European funds managing $2 trillion in assets called on cement companies to slash their greenhouse gas emissions on Monday, warning that a failure to do so could put their business models at risk.
Some asset managers are ramping up engagement with heavy polluters to demand a faster transition to a cleaner economy.
“The cement sector needs to dramatically reduce the contribution it makes to climate change,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, which has more than 170 members, mainly European pension funds and asset managers. “This is ultimately a business-critical issue for the sector,” Pfeifer said in a statement.
The group said investors had written to cement or construction materials companies including Ireland’s CRH, Franco-Swiss group LafargeHolcim and France’s St. Gobain to demand they achieve net zero carbon emissions by 2050.
They also noted that Germany’s HeidelbergCement had already adopted the target. The funds urged all cement companies to align themselves with the 2015 Paris agreement to combat global warming, engage with policymakers to ensure an orderly transition to a low carbon economy, and increase their reporting of climate risk.
“Construction materials companies may ultimately risk divestment and lack of access to capital as an increasing number of investors seek to exclude highly carbon-intensive sectors from their portfolios,” said Vincent Kaufmann, CEO of the Ethos Foundation.

FASTFACT

The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency.

Signatories collectively manage assets worth $2 trillion and include Aberdeen Standard Investments, BNP Paribas Asset Management, Sarasin & Partners and Hermes EOS.
Although funds are increasingly engaging with companies from airlines to carmakers on emissions, few are calling for the systemic transformation of the global economic system that scientists increasingly argue is needed to prevent runaway climate breakdown.
The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China.
With climate campaigners traditionally focused on fossil fuel companies, the European cement sector has received comparatively little scrutiny until recently.
On Tuesday, police arrested six climate activists from civil disobedience group Extinction Rebellion at a protest aimed at disrupting a site in east London belonging to London Concrete, a unit of LafargeHolcim.
In June last year, a report from think-tank Chatham House concluded that although there was no “silver bullet” to reduce emissions from cement, it should be possible to deploy a range of policies and technologies to achieve deep decarbonization.