Shares in Thomas Cook have slumped after the troubled travel operator said it was seeking to raise another £150m from investors – after already asking for £750m – to stave off a Christmas cash crunch.

Thomas Cook said it was in advanced discussions with its banks and Fosun, the Chinese conglomerate and its biggest shareholder, over the “substantial new capital investment”.

The British travel company, which traces its history to 1841, has struggled in recent years due to a large debt pile, intense competition and structural change to a travel industry lumbered with large branch networks. In recent months unseasonable weather and the impact of Brexit on consumers’ travel plans have added to its woes, pushing it to a £1.5bn loss for the six months to 31 March.

Thomas Cook owes its name to a humble and deeply religious 32-year-old cabinet-maker who, one June morning in 1841, hiked the 15 miles from his home in Market Harborough to Leicester, to attend a temperance meeting.

The former Baptist preacher believed that the ills of Victorian society stemmed largely from alcohol and, presumably fatigued from his walk, realised he could deploy the power of Britain’s flourishing rail network to help spread the word.

Addressing the temperance meeting, he suggested that a train be hired to carry the movement’s supporters to the next meeting in Loughborough.

Thus, on 5 July 1841, some 500 passengers travelled by a special train for the 24-mile round trip, paying a shilling apiece.

Over the next few years, Cook laid on ever more trains, introducing thousands of Britons to train travel for the first time. The first such outing to be run for commercial purposes was a trip to Liverpool in 1845.

Over the next decade or so, the business expanded to offer overseas trips, to France, Switzerland, Italy and beyond, to the US, Egypt and India.

His more business-minded son John expanded the tour operator and its reach was such that the government enlisted its expertise in an effort, ultimately in vain, to relieve General Gordon at the siege of Khartoum in 1885.

John’s three sons inherited the business, which incorporated as Thos Cook & Son Ltd in 1924 and benefited from the increasing ease of international travel.

Its first flirtation with collapse came during the second world war, when the government requisitioned some of its assets and it was sold to Britain’s railway companies, effectively a nationalisation.

But it boomed in the postwar years as growing prosperity fuelled the appetite for holidays and it returned to private ownership in 1972.

Since then, it has changed hands and changed shape via a series of mergers and takeovers. It nearly collapsed in 2011 but averted its demise with a bailout deal funded by banks.

Now, after 178 years of operation, it is relying on its largest shareholder – the Chinese conglomerate Fosun – to survive. 

Thomas Cook shares fell by a fifth on Monday to 6.2p amid questions of whether the company would survive. The price was a far cry from highs of 140p reached as recently as May 2018. The former FTSE 100 blue chip company was worth only £147.9m before the latest fall in its value.

The latest cash injection comes a month after Thomas Cook revealed it was in talks over a £750m rescue deal with Fosun, a Shanghai-based company with diverse interests that include Wolverhampton Wanderers football club, insurance and property businesses and the Club Med tourism brand.

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Thomas Cook said the extra £150m would provide it with liquidity headroom during the winter months, when travel operators generally ran low on cash after bulk buying hotel space before a surge of bookings for the next summer. It expects the bailout to be concluded in early October.

Those shareholders who have remained with Thomas Cook are expected to have the value of their shares “significantly diluted” by the bailout, which will result in about £1.7bn in debt converted to equity alongside the £900m cash injection.

The plans would also involve splitting its profitable airline from the tour operator business, which Fosun would essentially take over. Fosun would then have to decide on any reorganisation, prompting concern about the future of the 21,000-member workforce. The company has 563 high street branches in the UK.


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