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Thomas Cook in Talks to Increase Size of Proposed Rescue Package

Irene García Pérez and Richard Weiss
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Thomas Cook in Talks to Increase Size of Proposed Rescue Package

(Bloomberg) -- Thomas Cook Group Plc has told backers of its $1.1 billion rescue that it needs even more funds as it heads into the autumn season when travel firms spend more than they earn.

The company said it will require another 200 million pounds ($251 million) on top of 900 million pounds already agreed in a bailout led by Fosun Tourism Group. Thomas Cook’s shares fell as much as 28% after the company disclosed it had requested the extra cash.

The company that invented the package holiday has gone within a year from concern about how a freak north European heatwave in 2018 hurt sales to a full-on fight for survival.

It’s trying to save itself by swapping existing debt into shares, leaving Fosun holding the majority of its tour-operating business while a group of creditors will control its airlines. On Sept. 17, it filed for Chapter 15 court protection in the U.S.

The company needs the support of investors holding at least 75% of its debt when it puts its restructuring proposal to a vote on Sept. 27, a crucial step to get the plan approved by a U.K. court.

“The next few days are going to be pretty crucial for Thomas Cook,” said Neill Keaney, an analyst at CreditSights in London. “Time is of the utmost importance and things can unravel pretty quickly.”

A group of hedge funds is threatening to block the rescue because it may stop them cashing in holdings of credit default swaps that pay out when a company defaults.

Restructuring efforts also face the threat that customers stop buying vacations and flights from Thomas Cook for fear that the company won’t be around to honor their bookings.

The British Airline Pilots Association called on the U.K. government in a statement Friday to intervene and pressure banks to provide additional liquidity.

The stock was trading down 22% at 3.50 pence as of 10:52 a.m. in London, valuing the travel operator at around 54 million pounds, the lowest since the company took its current corporate structure in 2007.

--With assistance from Katie Linsell.

To contact the reporters on this story: Irene García Pérez in London at igarciaperez@bloomberg.net;Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Luca Casiraghi, Chris Vellacott

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