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@Soutar..it would not surprise me if a former director of Citi now employed by Fosuns gave this advice on how to structure the flow of cash with two core objectives.
1) Remove most of the bond holders debt.
2) Gain majority ownership of TCG through a D4E swap.
So we have TCG board giving false RNS announcements on the numerous bids they received for the airline with no mention that the initial bids were well below expectations..We also have PF flying to China for alledged rescue talks with Fosun without majority shareholders being aware. Or maybe PF also was simply being brought along unknowingly of the true Fofun objective of the alleged rescue package.
The sp crashes on the back of Citi analysts n a matter of weeks on claims the shares are worth zero pence. Yet through the rescue deal they are now worth 750m hardly zero!
So what next how are Fosun going to handle this risk of reputational damage if they are going to wipe out all those high profile institutional investors..Will they do a deal with them and as a consequence have to do a similar deal with all other investors on similar favourable terms.
Maybe Fosun don't want a two year battle as they encountered with the takeover of Club Med in 2014 which cost them 800m for a loss making much smaller than TCG travel operator with a turnover of just euro 1b and this is what they are up to.
If Citi and Fosun are colluding, the damage they have done with media assistance could be underestimated? Saying that, many thought RBS, Lloyds, etc were damaged by more by negative media.
This whole TC sp collapse stinks, i also think it's a long planned takeover under the guise rescue deal. Remember, telegraph reported saying talks have been ongoing for months!!
Bigwigs...I'm not entirely sure if Fosun can or even would want to get away with a 'back door' take over disguised as a 'rescue deal'.
The mechanics of the D4E would be this, most of the 1.6b debt converted to equity.
Fosun's fake rescue deal cash arrives and is treated as a loan in TCG's books and the cash paid to former lenders buying most of their equity.
Fosun loan would then be converted to equity given them majority ownership.
Hence Fosun would now own 75% of equity and bond holders 25% if the remaining 600m short term facility is not included in the D4E swap.
The issue here for Fosun is how to avoid the business reputational damage of wiping out the institutional investors and the employee share scheme assuming that they don't care so much about private investors.
Equally has the Board breached its fiduciary duties by working with a minority shareholder assisting them gain control over the wishes of the majority of shareholders?
I believe they have and can be sued!
Fosun would need to tread very carefully being a 85 billion business if it does not want alot of hacked off institutional investors after blood and their two pounds of flesh lining up to make Fosuns future growth difficult..No bank and no financial services coy would touch them with a barge pole and the reputational damage would be simply enormous!
This is before we even encounter the numerous complex and time consuming legal challenges in UK, USA and EU
law courts assuming no shareholder vote is granted and if TCG does the D4E swap on bond holders first ceeding control to them. With former bond now equity holders keen to get their hands on Fosuns cash!
This is certainly no Carillion, Debenhams, Flybe or Monarch resemblance here..Fosun values TCG at a minimum of 750m or close to a 1b if you include their 200m already invested
Alot of people have now sold out taking the loss on their holdings whichever way the SP moves now for whatever reason they have taken the loss, one issue is no one knows where next, most is speculation, and unable to make a calculated decision as a PI as to which way to move, sell. hold. buy!!!!! indeed over 21mil sells yesterday by those who feel its best to get out while circa 14.5mil shares bought by those who think its the right time to get. !!!!!!!! with what info we read coming from the press, anylysts, brokers, and now from tcg it seams the PI is about to be wiped out....which way now for the PI????others are hit I know, but it seams the PI is again bottom of the food chain, and not even thrown a bone, not enough life jackets to go around i guess.Sorry for the rant, yes im one of those PI's and yes I,m pi##ed.K
please keep us informed.... RNS 3rd May was very clear in respect of the company moving forward in a positive manner, that i recall at least 3 difrent mentions of confidence on 3 fronts, on that RNS plus other info gathered, people, including myself invested more, at that time the sp was circa 21p circa 8 weeks later we here the company is in trouble and the sp plumets to where we are now. circa 75% loss to the PI in less than 8 weeks. or in other words £100k turns into £25k .. or £10k invested is worth just £2.5k..... no matter what the amount the percentage is the same and whatever amount the loss is, is all relevent to the individual investor. Why should the PI be thrown under the bus once more, it seams these ftse 250/100 companies simply cant be trusted, if we wanted to take a bet or punt we would chuck a tenner on the horses or at the blackjack table and not invest after research in a long standing 185yr old ftse company. a lot have hard working people have been hit hard.
I actually agree with you, it’s not a rescue deal. It’s a take over and Fosun played well to get it for peanuts and PF gave it to them. Scum bag.
Hk85..oh yes there blatantly was misleading and quite clearly lying, their actions where at odds to the content of the RNS, that's obvious!..and the Biard had z clear obligation to notify investors that initial bids fell short of expectations.. which they did not..they lied end off!
Sajid.. the D4E will go nowhere without majority shareholder vote
Of course the RNS was misleading at no point did they disclose that the initial bids received were way below expectation what a completely dumb thing to say..The board gave clear indications that the process of selling the airline was going ahead!...which part can't you get you head around.. the part that the board lied..or the part that the board lied even more..And this rubbish about flying to China for rescue talks with Fosun while telling the world everything was ok, you really must be naive to think that the RNS was accurate and honest which clearly it was not!
Its not the debt size that's irrelevant, you would be surprised the size of debt in PE backed companies. Its the interest repayments that's the real issue coupled with the associated legal costs when it is refinanced...Actually when you remove the "one off" My Travel 1.1 billion write down, the net loss is 300 million or just 3.3% on a turnover of 6 billion which actually is curable..Close 300 shops and relocate head office and negotiate debt interest cost down to more realistic levels..The obvious point is clearly missed if you are Fosun why waste another 750 million when you have wasted 200m why throw more good money after bad?..You see that's not been answered, give you a big clue..its no rescue deal..hint....its a takeover aimed removing lenders putting Fuson in full control!!
So of the recent 1 4 billion loss, 1.1 billion was My Travel write off, one off accounting entry, so of the 300m net debt 200m was debt related...so bond holders and lenders cut your ridiculous interest rates or lose your capital.
The complex debt for equity swap had taken months to agree and, although it will be another couple before it is finalised,
Months to agree?? So that suggests PF has been misleading? Bass.
As if such a fate isn’t shocking enough, the true financial cost has finally emerged. Thomas Cook, a humble tour operator providing package holidays to the masses, has shelled out a staggering £1.2bn in interest on its borrowings and fees since the 2012 refinancing, providing a veritable feast for the throng of bankers, lawyers, public relations specialists and restructuring experts that have artificially kept it on life support.
Its crash landing is an exercise in collective failure that the City will want to quickly forget.
Thomas Cook boss Peter Fankhauser is a man in desperate need of a holiday. Like so many of his fellow countrymen of a similar age, the Swiss once looked tanned, fit and youthful but the toll of trying to turn around the struggling tour operator has caught up with the 58 year-old.
Ten days ago, the firm unveiled a £750m rescue deal – its second bailout in seven years – that hands control to Chinese conglomerate Fosun, and Thomas Cook’s lenders.
The complex debt for equity swap had taken months to agree and, although it will be another couple before it is finalised, the restructuring will save one of the travel industry’s most illustrious and oldest names from the scrapheap. Without the rescue, a crippling £1.6bn debt mountain would have forced it under.
While the ink was still drying on the rescue, Fankhauser took to the airwaves to talk up the bailout. Yet despite his valiant efforts, the best he could muster was to describe it as “a pragmatic solution that secures the business into the future”.
No wonder. Sure, one of the industry’s best known brands will live to fight another day, but it will almost certainly emerge from this latest shake-up as a shadow of its former self, dramatically paired back as some sort of psuedo online aggregator of holidays.
There’s no hiding the fact that it is a miserable outcome for a business that pioneered mass tourism and package holidays, has survived both world wars, and been through all manner of takeovers and corporate overhauls, to end up in the hands of its lenders.
In fact, Thomas Cook’s demise has been an exercise in value destruction on a scale few other company meltdowns can match. The malaise stretches back more than a decade and the overall bill runs into the billions of pounds.
First came a disastrous merger with MyTravel in 2007 under Fankhauser’s predecessor-but-one Manny Fontenla-Novoa, a deal that promised to create “an even stronger force” in the travel market, and that old favourite of egotistical, empire-building bosses: “significant value creation”.
The deal was a disaster. Earlier this year, Thomas Cook unveiled yet another profit warning, this time the result of a £1.1bn writedown on the MyTravel takeover.
Incredibly, just a few years later, Fontenla-Novoa doubled-down on his spectacularly stupid bet on the UK high street, merging its travel agency with the Co-op’s in 2011 and doubling the number of high street shops in the group to more than 1,200 just as internet bookings were beginning to take-off.
A financial bailout followed in 2012 and, yet, here it is seven years later having to undergo an even more severe rescue than the last after debts spiralled to a mind-boggling £1.6bn. This time, long-suffering shareholders will almost certainly be wiped out after watching their shares crumble from a high of nearly 300p to less than 5p over the last decade.
As if such a fate isn’t shocking enough, the true financial
Does anyone subscribe to the telegraph, if so could you post the full detail...thank you.
I fully understand the RNS
If there is a recapitalisation, all shares in the same class have to be offered the same terms. It just that fool PF who uses his words carefully, because he thinks he’s smart
The may be applies to the new rights issue. Normally when a company issue new share say 3 for every 5 shares they give priority to their existing SH. You’ll be able to trade those rights for a couple of weeks you can choose to either sell, do nothing or take up the right at the determined price. I’m not sure whether existing SH will have such privilege or the new issued shares will go directly to Fosun and TCG lenders
I can see your point, but the BOD are cleaver. They said "may be". They always have a way out of committing to anything.
Theres going wrong and being mislead
Saj the RNS couldn’t be any clearer
“Existing shareholders will be significantly diluted as part of the recapitalisation. However, shareholders may be given the opportunity to participate in the recapitalisation by way of investment alongside Fosun and converting financial creditors on terms to be agreed.”
I know exactly how you feel - I lost a lot. But the BOD worded the RNS very carefully each time. I decided to sell and get out, even on a massive loss. But, say if they do have a D4E and the price goes to say 2p or 3p then I'm back in for a long time punt. Look at what happened before. I think they are changing and moving forward.
But nothing is certain as we still know nothing of what they are doing. This is the frustrating bit.
Sadly, the answer to this is not much. Even if you win. There ain’t much left and it will take too much time for any result.
HK85, exactly what I said a few days ago. Hopefully in the dilution we will be left with a seed. We may well have to wait 10 years + to get our loses back, but at least we don’t lose.
Kingsteve good luck with your legal action, keep us posted of the outcome maybe one we can follow ur lead if I invest in a company that goes wrong
2013 they had diluted the shares, now this time it is different because the management have told the SH your shares are worthless .. For me I do not trust the directors, I want evidence of all offers that have been put on the table.
We have zero value in our shares right now , so going into admin, there's really nothing to loose .
I believe we have been mislead by the directors......thats why I'm fighting for legal action against TCG..