Thomas Cook shares sink amid speculation over imminent collapse

(Sharecast News) - Embattled tour operator Thomas Cook was under the cosh on Monday amid speculation that it's on the verge of collapse.
At 1555 BST, the shares were down 11.2% at 4.47p following a report in the Sunday Times that the Civil Aviation Authority (CAA) is on alert over the possible repatriation of millions of Thomas Cook passengers should the business collapse.

Thomas Cook announced last month that it had agreed the terms of a £900m rescue deal with its largest shareholder, China's Fosun.

However, the Financial Times said over the weekend that Thomas Cook will look to push back a crucial meeting of bondholders as it races to get support for the deal with Fosun. The FT said the company is likely to try and buy some time to conclude negotiations by appealing to a court to push back the meeting of bondholders that was scheduled for this Wednesday.

Thomas Cook needs to secure support from three quarters of its bondholders for the deal to be approved but according to the FT, some hedge funds are set to vote against the recapitalisation, which would result in existing shareholders' interests being significantly diluted.

Under the terms of the rescue deal, Fosun would take a 75% stake in the tour operating business and a 25% stake in the airline for £450m. Meanwhile, the company's core lending banks and noteholders would shell out £450m for a 75% stake in the airline and a 25% stake in the tour operator.