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The Elephant in the Room is the Thomas Cook Pension Scheme which has a massive deficit. Will Fosun and the Banks take on that liability as well?
This is too drawn out, if TC was a dog it would have been put-down by now. This pretence is getting predictably solemn now, if anybody had their eyes fixed firmly on TC it would have been snapped up overnight.
In any other industry the business would have been pushed through either:
- Debt for Equity swap with lenders- a CVA- Administration with a petitioned shutdown
Debt for Equity doesn't appeal to lenders as they know there is no true asset value and hedging bets against nothing more than a brand is too complex and probably wont pass numerous FCA legislations
CVA wouldn't work, as the business would lose arguably its only immediate and valuable asset (ABTA/ATOL) which would been written off if the company changed hands, or in a CVA actually forcibly made bankrupt. The phoenix company would be able to buy assets, but schemes and licences would need to be applied for and funded again
Administration should be the proper option, and I am still truly amazed that this hasn't been forced upon TC yet - especially considering what they have amassed as a funding plan would not pass any test in any other industry. I would also guess that the business owes a considerable amount of cash to HMRC - in which case, they should be petitioning for a winding-up order. This is a business that is out of cash and arguably trading insolently - which is illegal. I'm sure their Legal Counsel and Accountancies are keeping the wolves from the door, but there will be a time where the bite is too strong and they will have to relent.
Even after finding cash from future investors, the fact that so late in the day they are still £150m short - says alot about the confidence of the future investors - who are obviously keeping their powder dry.
This is a tricky story and I'd be amazed if it plays out in the positive way that TC are trying to spin it.