Debt-laden travel company Thomas Cook has agreed to a bail-out deal by investor Fosun Tourism Group, its major shareholder.
The world's oldest travel company has struggled with intense competition in popular destinations, high debt levels and an usually hot summer in 2018, which reduced its last-minute bookings.
The deal will see the Chinese group inject £450 million (US$549 million) in return for at least 75% of Thomas Cook’s tour business and 25% of its airline.
The UK tour operator will receive a further £450m from its lending banks and bondholders, for 75% of the airline and up to 25% of the tour operator business.
The move will result in a significant dilution in existing shareholders’ interest, Thomas Cook said, but that it had decided it would be the best way to secure the future of the group for all its stakeholders.
This summer, the company reported half-year losses amounting to £1.5 billion.
The firm, which was founded in Market Harborough in 1841 to run temperance day trips, has annual sales of £9 billion, 19 million customers a year and 22,000 staff operating in 16 countries.
The travel firm issued three profit warnings in a year and is struggling to reduce its debts. It has also been trying for a long time to sell off its airline business.
Fosun, already Thomas Cook’s largest shareholder, also owns the Club Med holiday business and Wolverhampton Wanderers Football Club.