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.”


Small reactors could meet Saudi Arabia’s energy needs, report says

Updated 15 December 2019

Small reactors could meet Saudi Arabia’s energy needs, report says

  • Small modular reactors are a type of nuclear fission reactor that is smaller than conventional reactors

JEDDAH: Saudi Arabia is exploring ways to produce energy to achieve sustainable development and protect the global ecosystem.

The Kingdom currently relies heavily on oil and natural gas to meet its electricity needs. According to official estimates, Saudi Arabia expects a 40 percent rise in local electricity demand between 2019 and 2030.

This expected rise in electricity use is due to the rapid growth of urban areas and the Kingdom’s plans to develop a strong manufacturing sector and expand its industrial base as envisioned in Vision 2030.

Such a scenario calls for exploration of alternative methods of electricity generation such as nuclear energy, solar and wind power.

Nuclear power provides 11 percent of the world’s electricity, with 454 nuclear reactors operating in 30 countries and 54 plants under construction — including 11 in China, seven in India, and six in Russia.

The Saudi government announced its nuclear national policy in 2018. It plans for as many as 16 nuclear plants over the next 25 years at a cost of more than $80 billion. The Kingdom plans to meet 15 percent of its growing energy needs from nuclear power by 2032.

The government has also set ambitious goals for renewable energy, such as achieving 27.3 gigawatts of solar and wind power by 2024.

Nuclear energy is not only clean but available around the clock. Renewables such as solar and wind are good energy sources but are dependent on weather conditions, which are not always stable.

The King Abdullah Petroleum Studies and Research Center (KAPSARC) recently published a study calling for the use of small modular reactors (SMRs) in the Kingdom to achieve its Vision 2030 goals.

SMRs are a type of nuclear fission reactor that are smaller than conventional reactors. They are manufactured at a plant and brought to a site to be assembled. These reactors allow for less on-site construction, increased containment efficiency and security of nuclear materials.

“The average capacity of nuclear reactors has grown from 50 megawatts electric (MWe) in the 1950s to around 1.65 gigawatts electric (GWe) today,” according to the study.

The study said the deployment of SMRs in the Kingdom would allow it to use its oil reserves better and meet its increasing domestic energy demand. It would also enable the development of human capital through knowledge transfer and the growth of public and private sector investments through the development of the SMR value chain.

The localization of SMR technology in Saudi Arabia would also offer great economic and developmental benefits toward the realization of Saudi Vision 2030’s targets and goals.

Since the 1950s, nuclear generation technology has transformed and developed. After the three major nuclear accidents — at Three Mile Island, Chernobyl, and Fukushima — nuclear power has become more robust, safer and more secure.

According to KAPSARC, the design of SMRs requires lower initial investment and shorter simplified design construction times compared with large modular reactors (3 years as opposed to 7-10 years), as the unit can be expanded at any time (buying one module and adding others later).

Additionally, the operation of SMRs requires less capital compared with large reactors (LRs). The paper shows that the cost of SMRs is less than that required to fund LRs, which would help to build investor confidence and allow for investment. Additionally, the safety of SMRs is greater than that of LRs.