Fosun books early return flight from UK holiday

Fosun Tourism

24/09/2019 02:56

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Sharon Lam
    HONG KONG, Sept 24 (Reuters Breakingviews) - Fosun Tourism’s
 1992.HK  getaway with Thomas Cook  TCG.L  has come to a rainy
end. The 178-year-old British travel company collapsed on Monday
after Downing Street declined a bailout, stranding hundreds of
thousands of tourists. Fosun Tourism’s 450 million pound rescue
bid, which might have salvaged its 18% stake and given it
control, has been stranded too. 
    When Thomas Cook announced a recapitalisation plan in
August, Fosun Tourism, spun off from the giant Fosun
International in December, was dealt a better hand than others.
Under the terms, the operator of the all-inclusive Club Med
resorts would have received around 75% of the core tour business
and a quarter of its airline; other existing shareholders faced
significant dilution.
    But these investors appeared put off in September when
lenders asked for another 200 million pounds to keep the
company’s operations afloat, as did the British government.
Fosun declined to up its commitment, and the rescue attempt
ended. 
    The loss may look like chump change for parent Fosun
International  0656.HK , a giant conglomerate with overseas
assets ranging from fashion house Lanvin to the Wolverhampton
Wanderers football club. For Fosun Tourism, however, it stings.
Heavily indebted, its shares have slid by a third since its
initial public offering. The company posted an annual profit in
2018, its first after years of losses, but that amounted to only
389 million yuan (44 million pounds), less than a fifth of the
stake value just destroyed.
    Shares sank over 4% in Hong Kong on Monday, suggesting
investors are unhappy the deal died. It does mark a strategic
embarrassment for a business focused on overseas travel
expansion. Fosun has had a joint venture with Thomas Cook since
2015, yet the partnership appears to have produced little real
value, and now stands abandoned. Shareholders may feel the same.
    On Twitter https://twitter.com/sharonlamhk
    
    CONTEXT NEWS
    - Thomas Cook, the world’s oldest travel firm, collapsed on
Sept. 23, stranding hundreds of thousands of holidaymakers. A
900 million pound recapitalisation plan that involved China’s
Fosun Tourism fell apart after it failed to secure a deal with
creditors, or a government bailout. 
    - Thomas Cook in August said it had said that it had agreed
the main terms of a package that would have given Fosun Tourism
around 75% of the tour operator and 25% of the group’s airline.
Thomas Cook’s lending banks and bondholders would contribute a
further 450 million pounds and convert their existing debt to
equity. 
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    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
British travel firm Thomas Cook collapses, stranding hundreds of
thousands     urn:newsml:reuters.com:*:nL5N26E01M
BREAKINGVIEWS- Thomas Cook crash is dry run for Brexit failures 
   urn:newsml:reuters.com:*:nL5N26E1OG
BREAKINGVIEWS - Thomas Cook wipeout forces Fosun to double down 
   urn:newsml:reuters.com:*:nL8N24D1KP
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Editing by Pete Sweeney and Katrina Hamlin)
 ((sharon.lam@thomsonreuters.com; Reuters Messaging:
sharon.lam.thomsonreuters.com@reuters.net))