Dear colleagues,
The last few months have been full of uncertainty and I know from many personal conversations that you have been concerned about the future of Thomas Cook. So today, I want to share with you all a proposal to put our business on a more stable financial footing.
Firstly, we are in advanced discussions on a plan that would see Fosun, our largest shareholder and long term strategic partner, and our core lending banks invest a significant amount of new money – a targeted £750m - into our business. This new investment would form part of a wider recapitalisation of our balance sheet, which will involve converting the majority of our current bank and bond debt into new equity or ownership of our business.
By doing this, our existing shareholders will be left with little or no value in the Thomas Cook shares they own. In fact, as the markets open today we expect this to have a very negative impact on our share price. I fully acknowledge that this is not what any of us wanted for our shareholders, many of whom are loyal employees who have stuck by me and the management team for many years. However, we have tried to operate with too much debt for too long and after exploring a broad range of options, it became clear that a deal of this nature was the responsible solution. We will try to preserve as much value as possible for shareholders in the circumstances but we need to be realistic. However, the new money from Fosun and our lending banks, along with significantly lower debt, would give us a more sustainable capital structure and a better future for our business.
This proposal would represent a major commitment from Fosun and our lending banks, backing both the brand and our business for the long term. Giving us the certainty that we need to regain the confidence of our customers and suppliers.
This is just the start of a process and we expect the initial recapitalisation to complete in the Autumn. At the end of the process we will reorganise the ownership of the Group, with the Tour Operator and the Airline becoming separate businesses, still continuing to work closely together. The Tour Operator is likely to become a private company under Fosun majority ownership and the Airline would be majority owned by our banks and the holders of other long-term debt, with Fosun taking a significant minority stake.
This announcement has no impact on our holidays or our flights, which will continue to operate as normal with the same customer protections they’ve always enjoyed. However, this plan does not mean that the fight is over, in fact the challenge is even bigger than before. The pressure is on and the expectations are high, from all sides – our customers, our prospective investors, our hotel partners and the regulators. As we embark on this process we must be prepared to change, and this is within our control to actively manage. Most importantly we need the businesses to become more profitable.
In addition to ensuring the deal is implemented with broad stakeholder support, I have two main priorities throughout this process: our customers and you, my valued colleagues. Our customers are the reason we exist and in this, the peak of our summer season, it is critical that we continue to focus on offering them amazing holidays and experiences that they genuinely can’t get anywhere else.
Finally, I urge you to help me to use this opportunity to deliver to our full potential. As in any transaction of this size and complexity, the recapitalisation and restructuring of our business under new ownership will take time. There is no doubt that the coming months will be challenging and marked by change. However, the expertise, drive and resilience of you our employees around the globe is really what characterises Thomas Cook.