Thomas Cook, a global travel company based in based in London, needs to find 200 million pounds for lenders or it could collapse, according to a report by Reuters.
If the company did go under, it would possibly strand vacationers all across Europe. Thomas Cook’s workers, which number around 21,000, are also in jeopardy.
Thomas Cook said that trying to get the capital put it in “a significant risk of no recovery” for its diluted shareholders. The company’s shares took a big hit on the news, hitting an all-time low of 3.22 pence, and the stock went down 15 percent in morning trading.
“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 pounds, on top of the previously announced 900 million pounds injection of new capital.”
Thomas Cook has about 1.7 billion pounds of debt, and has been dealing with increased competition for popular destinations and a summer that was so hot it made the number of last-minute bookings go down significantly.
The Royal Bank of Scotland (RBS) reportedly asked Thomas Cook for the extra capital, saying the situation “was becoming more critical.”
An RBS spokesperson told Reuters that it didn’t “recognize this characterization of events” and that everyone was working to “try and find a resolution to the funding and liquidity shortfall at Thomas Cook.”
The original plan stated that Fosum would put in 250 million pounds of new capital and get 75 percent of the tour business and 25 percent of Thomas Cook’s airline. The travel company’s bondholders and financial institutions were going to come up with 450 million pounds and then convert their debt into equity, which would give them about 75 percent of the airline and one fourth of the tour business.
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