Britain’s Thomas Cook scrambles for $250m to avert collapse

Lenders are demanding another £200 million in underwritten funds to support Thomas Cook in its winter trading period. (Reuters)
Updated 20 September 2019

Britain’s Thomas Cook scrambles for $250m to avert collapse

  • Thomas Cook employs 21,000 people across 16 countries
  • Lenders are demanding another £200 million in underwritten funds to support Thomas Cook in its winter trading period

LONDON: Britain’s Thomas Cook scrambled on Friday to find an extra $251 million (£200 million) to satisfy its lenders and secure the survival of the world’s oldest holiday company.
Last month Thomas Cook, the pioneer of the package tour, agreed key terms of a £900 million recapitalization plan with Chinese shareholder Fosun and its banks.
Thomas Cook, which employs 21,000 people across 16 countries, warned on Friday that this could mean shareholders losing all of their investment.
“The recapitalization is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery,” Thomas Cook said.
Lenders are demanding another £200 million in underwritten funds to support Thomas Cook in its winter trading period, when its cash is usually at a low ebb.
“Discussions to agree final terms on the recapitalization and reorganization of the company are continuing between the company and a range of stakeholders,” Thomas Cook said.
“These discussions include a recent request for a seasonal standby facility of £200 million, on top of the previously announced 900 million pounds injection of new capital.”
Thomas Cook, which has around 600,000 customers on holiday in Europe, has struggled with competition in popular destinations, high debt levels and an unusually hot summer in 2018 which reduced last-minute bookings.
A source close to the discussions said on Thursday that Royal Bank of Scotland (RBS) had hit Thomas Cook with a last-minute demand for the extra funding, adding that the situation “was becoming more critical.”
A spokesman for RBS said the bank did not “recognize this characterization of events” and was working with all parties to “try and find a resolution to the funding and liquidity shortfall at Thomas Cook.”
Under the original terms of the plan, Fosun — whose Chinese parent owns all-inclusive holiday firm Club Med — would contribute £450 million ($552 million) of new money in return for at least 75 percent of the tour operator business and 25 percent of the group’s airline.
Thomas Cook’s lending banks and bondholders were to stump up a further £450 million and convert their existing debt to equity, giving them in total about 75 percent of the airline and up to 25 percent in the tour operator business, the group said.
Thomas Cook said on Friday it would provide further updates “in due course.”


Arabtec Holding said to hire AlixPartners for debt advisory

Updated 25 September 2020

Arabtec Holding said to hire AlixPartners for debt advisory

DUBAI: Dubai-listed contractor Arabtec Holding has hired advisory firm AlixPartners to help it restructure the company’s debt, two sources familiar with the matter said.

AlixPartners is assessing the company’s debt profile, before any potential discussions with Arabtec’s creditors, according to the sources, who declined to be named as the matter is not public.

Arabtec did not respond to a query for comment when contacted on Thursday. AlixPartners declined  to comment.

Arabtec Holding is due to hold a shareholder meeting on Thursday afternoon to decide whether to continue operating or liquidate and dissolve the firm after the pandemic hit projects and led to additional costs.

FASTFACT

 

Arabtec last month posted a first-half loss of 794 million dirhams ($216.18 million).

The company, which last month posted a first-half loss of 794 million dirhams ($216.18 million) and total accumulated losses of 1.46 billion dirhams, said on Sept. 9 that it was calling a general assembly under an article of UAE company law.

The law requires companies to vote on whether they should continue operating if their accumulated losses reach half of their issued share capital.

Shares of Arabtec Holding, which helped to build the Louvre Abu Dhabi and the world’s tallest skyscraper, the Burj Khalifa in Dubai, have plunged 56.7 percent this year. They were down almost 5 percent when a suspension of trading was triggered at 1 p.m. local time ahead of the meeting, which was being held in Abu Dhabi.

Several UAE companies have sought to extend debt maturities or agree better terms in recent years to avoid defaults, after an oil price crash hit energy services and construction.

This week, creditors started to enforce claims against Abu Dhabi-based Al Jaber Group, which has struggled since building up debt in the wake of a UAE real estate crisis and began talks with creditors in 2011.

Dubai-listed construction firm Drake & Scull is working under the UAE bankruptcy law to reach an agreement with its creditors in an out-of-court process.