Thomas Cook Group is in talks with its lenders to increase the size of a rescue fundraising to £1bn after Britains oldest travel agent warned it could face collapse unless it finalises a deal this month.
Sky News has learnt that fresh talks between Thomas Cook and its financial stakeholders in recent days have resulted in a request for more capital to be made available to the company than the £900m proposed last month.
Sources said on Thursday that its lending banks were seeking greater comfort about the tour operator's financial headroom.
As a result, Thomas Cook is now in talks about an offer from creditors of an additional standby borrowing facility to provide that reassurance.
One City insider said that the standby facility was not expected to be drawn upon and that the travel group continued to believe that the £900m it has been in talks with stakeholders about for several weeks is sufficient.
Nevertheless, if confirmed it would take the aggregate size of the new money available to Thomas Cook to at least £1bn, and possibly as much as £1.1bn, as a cushion to help it survive tough trading conditions.
The additional demand is significant because the banks' support – along with that of other creditors – will be required in order for the deal to be implemented.
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It also adds a further layer of complexity to a situation made increasingly fraught by Thomas Cook's need to finalise the rescue package in the coming weeks.
In a court filing dated 30 August seen by Sky News, Thomas Cook warned that it was running out of time to secure its future.
"The serious liquidity issues within the group have led to an urgent need to complete any restructuring within September.
"[Any] delay would make it impossible to implement a restructuring transaction within September, and the Scheme Companies would be likely to run out of money and enter into formal insolvency proceedings," it said.
The warning was contained in a legal argument asking the courts to accelerate the process for implementing Thomas Cook's refinancing.
Sources insisted that the deal timetable remained fluid and that finalising the transaction could slip into next month without any adverse consequences for the company.
In its most recent stock market announcement about the restructuring on 28 August, Thomas Cook referred to an "implementation commitment targeted for early October 2019".
However, the legal filing is the starkest alert so far about the perilous situation confronting the 178 year old travel agent, which is being forced to address competing demands from a multitude of different stakeholders.
It also highlights the huge stakes involved in the rescue effort, with 21,000 jobs – 9000 of which are in the UK – potentially jeopardised if the deal does not get over the line.
Some 11 million customers will have travelled with Thomas Cook by the end of the crucial summer season, with tens of thousands of Britons currently overseas on holidays they have purchased from the company.
Last weekend, Sky News revealed that Thomas Cook's pension trustees were insisting on sweetened terms in exchange for backing the recapitalisation.
Sources said the pension scheme, which is in surplus on an accounting basis, was seeking equity in the restructured company, funding guarantees and a commitment from the new owners to continue existing annual contributions of more than £25m.
Earlier this week, Bloomberg News reported that hedge funds which hold credit insurance contracts were considering whether to try to derail the rescue plan in order to ensure they received payouts.
Thomas Cook's board has been meeting for the last two days to discuss the most viable path to finalising the restructuring before the company runs out of money in October.
The first in a series of stakeholder votes is due to take place next week.
One source said on Thursday night that the deal looked "harder and more complicated than it did a few days ago".
Under the terms of the rescue plan, on which Thomas Cook said a fortnight ago it had reached "substantial agreement", Fosun would inject £450m of new money into the company, in return for 75% of its tour operating business and not more than 25% of its airline.
EU ownership rules prohibit Fosun from controlling the Thomas Cook airline business.
Lending banks and bondholders would contribute £450m in aggregate and write off £1.7bn in existing debt in exchange for the remaining stakes in the two divisions.
That would leave shareholders being effectively wiped out by the restructuring – with the cancellation of Thomas Cook's listing a likely consequence.
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