Peterborough’s Thomas Cook ‘needs £200 million to survive weekend’
Peterborough based tour operator Thomas Cook has confirmed that it is seeking £200 million in extra funding as it attempts to prevent a collapse.
The company, which employs 1,000 people at their Lynch Wood base in Peterborough said it is in talks with stakeholders, including leading shareholder Chinese firm Fosun, to bridge the funding gap to stave off entering administration.
In an update to the market, it said the fundraiser is expected to significantly dilute existing shareholders’ stakes in the firm, with “significant risk of no recovery”.
Were the company to go under, an estimated 180,000 people could be stranded abroad, while the firm employs 22,000 staff around the world, including 9,000 in the UK.
Thomas Cook said the £200 million needed would be a “seasonal standby facility”, on top of £900 million it had already raised from Fosun and its lenders.
The travel firm has suffered recently as a result of mounting debts, reporting a £1.2 billion net debt in its half-year results in May.
It has also been hit hard by an influx of online competitors which has resulted in oversupply, forcing tour operators to cut prices.
The 178-year-old firm could go bust by Sunday, company insiders have allegedly told the Daily Mail.
The paper also said that government officials have drawn up plans for what would be “Britain’s biggest peacetime repatriation”.
Known as Operation Matterhorn, it has been put together by the Department for Transport and the Civil Aviation Authority, the paper said.
A Department for Transport spokeswoman said: “We do not speculate on the financial situation of individual businesses.”
In the High Court last month, barrister Tom Smith QC, who led Thomas Cook’s legal team, told Mr Justice Norris that the Thomas Cook group had a “net debt position” of around £1.25 billion.
He said a planned deal with Chinese tourism group Fosun would involve an injection of £900 million of “new money”.
Mr Smith said Thomas Cook had suffered because of a “general economic downturn”, declining consumer confidence, increased competition from lower cost rivals, the effects of a heatwave in 2018, “environmental concerns” and the weak performance of sterling.