From what I can see Thomas cooks net debts and net assets are about the same, so there’s no equity in the company.
But if they swap £1.5bn of debts into ownership of the company then the company’s net assents will out weigh net debts by £1.5bn, so there’s value. To do this ownership has to be handed over to the debt holders, and shareholders are wiped out. As has happened.
So now with no debt, Thomas cook will benefit from a £450m investment from Fosun, and a £300m revolving credit facility. The credit facility will help TCG smooth out seasonal cash flow. And the £450m will be to invest in the business and turn it around.
Historically TCG has made decent operating profits. You have to if your going to pay the interest payment on £1.5bn of debt. This amounts to £1.2bn over the last 8 years. But the last 2 years have been difficult and has bought the situation to a head.
At at the end of this TCG “should” be virtually debt free, streamlined and agile. Able to invest in its business and have turned its self around.
And the price for all this? The shareholders.