Thomas Cook Group PLC has been forced to enter into compulsory liquidation, effective immediately, after the British travel service provider failed to secure support from its shareholders and lenders for a £900 million rescue deal.
Under the proposed rescue deal, Thomas Cook's investor, Fosun Tourism Group, would have acquired 75% of the British company's tour operations and 25% of its airline business in exchange for a £450 million investment, while banks and creditors would have also invested £450 million in fresh funds to the company in exchange for 25% of the tour operations and 75% of the airline division.
In a statement Sept. 23, Thomas Cook said it "continued to engage with a range of key stakeholders over the weekend in order to secure final terms on the recapitalization and reorganization of the company."
However, the company said talks between its shareholders and creditors fell through, prompting it to enter into compulsory liquidation.
On Sept. 16, Reuters reported that Royal Bank of Scotland Group PLC, one of Thomas Cooks' lenders, made a last-minute demand for an extra €200 million of underwritten funds, placing further pressure on the rescue deal. The company confirmed the €200 million demand last week, without disclosing the lender. At the time, Thomas Cook reiterated that the proposed rescue deal would result in the dilution of existing shareholders' interests, "with significant risk of no recovery."
The High Court has tapped the Official Receiver — part of the government's Insolvency Service — as the liquidator of the company. Thomas Cook expects the Official Receiver to make an application to the High Court to appoint members of AlixPartners UK LLP to serve as the company's special managers during the process.
Thomas Cook added that AlixPartners is expected to work with the U.K.'s Civil Aviation Authority, or CAA, to repatriate all U.K. customers affected by the company's liquidation.
In a separate statement, the British government and the CAA said they will launch the "largest repatriation in peacetime history" after all of Thomas Cook flights were canceled as a result of the liquidation.
"All customers currently abroad with Thomas Cook who are booked to return to the U.K. over the next two weeks will be brought home as close as possible to their booked return date," according to a release from the U.K. government.
Thomas Cook's shares were suspended from trading following the announcement. On Sept. 20, the company's stock plunged as much as 55.25% to 2.0 pence before paring losses to close down 22.78% at 3.45 pence.
