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Report: Thomas Cook hit with £200M funding demand in blow to rescue deal

Royal Bank of Scotland Group PLC, one of the lenders of Thomas Cook Group PLC, has made a last-minute demand for an extra £200 million of underwritten funds, which could place further doubts on the British travel services company's £900 million rescue deal, Reuters reported Sept. 20, citing a source close to the discussions.

Thomas Cook on Aug. 28 agreed to the key terms of its rescue deal with its investor, Fosun Tourism Group, along with banks and the majority of its senior noteholders. Under the proposal, Fosun International Ltd.-owned Fosun Tourism will invest £450 million in the company, while Thomas Cook's core lending banks and noteholders will also pump £450 million in fresh funds.

In turn, Fosun Tourism will have 75% of Thomas Cook's tour operations and 25% of its airline business, with the banks and noteholders securing the remaining 25% of the tour operations and 75% of the airline unit.

Thomas Cook is racing to secure the support of three-quarters of its bondholders. The Financial Times reported Sept. 15 that the company postponed a meeting with its bondholders while it works on last-minute negotiations.

Reuters said Sept. 20 that the Royal Bank of Scotland was leading the last-minute demand for extra funds.

However, a spokesman for the bank told the news outlet that RBS did not "recognize this characterization of events."

"As one of a number of lenders, RBS, has provided considerable support to Thomas Cook over many years and continues to work with all parties in order to try and find a resolution to the funding and liquidity shortfall at Thomas Cook," the spokesman added.

FTI Consulting, which advises to the banks involved in the talks, reportedly confirmed that the £900 million investment from Fosun, the banks and noteholders was sufficient liquidity for the company's business plan and recapitalization.

The advisory firm declined to comment, Reuters said.

On Sept. 18, London-based Thomas Cook filed for bankruptcy protection in the U.S. in a bid to protect itself from potential legal actions by local debtholders.

The FT had earlier reported that a group of hedge funds could vote against the rescue plan unless they get paid for their credit default swaps under the restructuring. The restructuring would result in the dilution of existing shareholders' stakes and the potential cancellation of Thomas Cook's listing.