Embattled travel firm Thomas Cook has agreed to a rescue deal with major investor Fosun Tourism Group, its banks and a majority of its senior noteholders, following its earlier statement in July that the proposed £750 million (US$939 million) bailout by Fosun was its best option.
The new deal would see Fosun taking majority stake of the business.
Fosun will put in £450 million (US$549 million) to acquire at least 75 per cent of the equity of the tour operator and 25 per cent of the group’s airline, said the travel firm in a statement.
Thomas Cook’s core lending banks and noteholders will also pitch in a further £450 million for 75 per cent of the equity of the group’s airline and up to 25 per cent of new equity in the group tour operator.
In its July 12 announcement, Thomas Cook said that shareholders may be given the opportunity to participate in the recapitalisation by way of investment alongside Fosun and converting senior creditors on terms to be agreed.
The company added in its statement that the board continues to proceed on the basis that a recapitalisation, achieved with the support of shareholders, is the preferred means of securing the future of the group for all its stakeholders, while at the same time enabling the existing shareholders to continue to retain an investment in the company.
However, the recapitalisation is expected to result in existing shareholders’ interests in the recapitalised and reorganised group airline being significantly diluted, subject to feedback from creditors, the new money providers and other stakeholders, said the company.
This summer, Thomas Cook reported a £1.5 billion half-year loss, according to a BBC report.
The firm, added the report, has annual sales of £9 billion, 19 million customers annually and 22,000 staff operating across 16 countries.
The travel firm, which has issued three profit warnings within a year and is struggling to cut its debts, has been trying for a long time to sell its airline business, said the report.
The implementation of the deal is targeted for early October 2019.
Indonesian travel industry members have voiced their support for president Joko Widodo’s plan to move the country’s capital to East Kalimantan, predicting that the move will help boost tourism and bring about better infrastructure to the Indonesian portion on the island of Borneo.
Haryadi Sukamdani, chairman of Indonesian Hotel and Restaurant Association, welcomed president Jokowi’s plan to move the capital, which will straddle North Penajam Paser and Kutai Kartanegara regencies in East Kalimantan.
The hotelier said: “This will bring positive impacts to tourist destinations, (particularly) in East Kalimantan. Kutai Kartanegara is rich in natural resources, including nature attractions, but the regency has yet to explore its tourism potential to the maximum due to the lack of infrastructure.”
Similar to Kutai Kartanegara, North Penajam Paser also has infrastructure that remains far from adequate, according to Haryadi, who shared the example of having to use a long, drawn-out route from North Penajam Paser to the well-developed city of Balikpapan, due to Balikpapan Bay that separates the two cities.
Should the local government build a bridge between North Penajam Paser and Balikpapan, he suggested, travellers would benefit from the shorter travel time and the regency could speed up its tourism development with better infrastructure.
Like Haryadi, Haryadi, Sudarsana, general manager of business development of Santika Indonesia Hotel and Resorts, also expects the new location of the capital city would boost tourism in Kutai Kartanegara and North Penajam Paser, encouraging locals to create new offerings in the regency to lure more tourists.
He said that the new capital city would also benefit the neighbouring provinces on Kalimantan Island because of its strategic location. Hoteliers and business players in the travel industry would not miss this good momentum to expand or deepen penetration into Kalimantan.
“Luxury and star-rated hotels will pop up in North Penajam Paser and Kutai Kartanegara,” he projected.
Currently, Santika Indonesia Hotels and Resorts has three hotels in the area – Samarinda in East Kalimantan, Banjarmasin in South Kalimantan and Palangkaraya in Central Kalimantan.
According to Sudarsana, Santika is considering to open a new property in East Kalimantan. He said: “We have yet to make a decision, but (the opening of the new hotel) is already in discussion. We have surveyed the location.”
Bahriyansyah, owner of Bee Holidays, states that tourist attractions in Kalimantan possess their own uniqueness and are not inferior to those in Java.
“We have world-class tourist sites, such as the Derawan Islands. I believe that president Joko Widodo’s decision to pick East Kalimantan as the new site of the capital city will scale up the brand of tourism in (the area),” he said.
“When it comes to promoting tourist sites, for example, we (travel agents in Kalimantan) are on our own now. We need the government to help support and back us up in branding our tour products,” added Bahriyansyah, who also expects that the capital city move would uplift Kalimantan’s profile through a better private-public partnership.
However, he foresees the opening of the new capital will entail migration from other parts of the country, which in turn will lead to greater competition for the local community.
Bahriyansyah hence would like the government to prepare the local trade in Kalimantan to face this potential challenge so that they would not be left behind as competition intensifies.