Thomas Cook Group PLC is set to delay a meeting with its bondholders to vote on a proposed £900 million rescue deal, the Financial Times reported Sept. 15, citing sources close to the business.
The British travel services company is working on last-minute negotiations to finalize the terms of its restructuring agreement with Fosun Tourism Group, banks and the majority of its senior noteholders.
Thomas Cook approached Fosun International Ltd.-owned Fosun Tourism in July for a £750 million recapitalization plan. The company said Aug. 28 that under the latest terms, Fosun Tourism will invest £450 million in cash to Thomas Cook, in exchange for 75% of the equity of the company's tour operations and 25% of its airline business.
Additionally, Thomas Cook's core lending banks and noteholders agreed to invest a combined £450 million of new funds to the company and convert their existing debt into about 75% of the equity of Thomas Cook's airline division and up to 25% of new equity of the company's tour operations.
Most recently, the FT said the deal would need the backing of three-quarters of Thomas Cook's bondholders. However, a group of hedge funds could reportedly vote against the plan unless they get paid for their positions in the process.
Under the proposed recapitalization plan, existing shareholders would be "significantly diluted" and it could also result in the cancellation of Thomas Cook's listing. The hedge funds reportedly want a deal that would ensure that the credit default swap will work under the restructuring, while investors are frustrated that the details of the debt-for-equity swap have not yet been released.
The newspaper said Thomas Cook would likely appeal to a court to push back the meeting of bondholders scheduled for Sept. 18.
Thomas Cook declined S&P Global Market Intelligence's request for comment.
