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

Guo Guangchang, the chairman of Fosun International. (Reuters)
Updated 13 July 2019

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.


Nearly 20% of Japan households using e-money but cash still king

Updated 17 min 23 sec ago

Nearly 20% of Japan households using e-money but cash still king

  • About 18.5 percent of Japanese households said they use electronic money, such as smartphone apps and debit card payments
  • Prime Minister Shinzo Abe is pushing to make more Japanese switch to cashless payments
TOKYO: Almost a fifth of Japanese households use electronic money for small purchases, a survey by a central bank-affiliated research institute showed, up from a year ago and a sign the country’s cash-hoarding culture is changing.
In the survey published on Monday and conducted between June and July, 18.5 percent of households said they use electronic money, such as smartphone apps and debit card payments, on shopping trips where ¥1,000 ($9.17) or less is spent, up from 15.4 percent in the previous year.
Among single-person households — 43 percent of whom are in their 20s and 30s — the ratio was much higher at 35.6 percent, suggesting government efforts to prod Japanese to go cashless may be paying off, at least among the younger generation.
Despite the growth in electronic payments, Japan’s “cash-is-king” mentality remains entrenched with the survey showing 84 percent still use notes and coins for small purchases.
And for payments exceeding ¥10,000 and up to ¥50,000, 48.5 percent of households said they pay by cash and 3.4 percent by electronic money, the survey showed.
A low crime rate, years of ultra-low interest rates and a nationwide network of automatic-teller machines (ATMs) have long made cash appealing in Japan, giving people few reasons to shift to cashless payments.
Prime Minister Shinzo Abe is pushing to make more Japanese switch to cashless payments to allow stores to automate sales estimates and banks to cut back on costly ATMs.
Shoppers have recently been encouraged to ditch cash for e-money after the government introduced a rebate program to ease the pain of a sales tax hike on Oct. 1.