Thomas Cook Up Most in 4 Months on Report of Buyout Interest

(Bloomberg) --

Thomas Cook Group Plc rose the most since December after Sky reported potential bidders have approached the debt-laden travel company to purchase all or part of its businesses.

Suitors have asked about taking over Thomas Cook’s tour operating unit, as well as the entire company, Sky News reported on Saturday, citing unidentified people familiar with the matter. Fosun International Ltd., Thomas Cook’s biggest shareholder and its joint-venture partner in China, has expressed interest in buying the group’s tour operating business, Sky said.

A Thomas Cook spokesman declined to comment. The company has been working to restructure its business after a series of miscues last summer left the world’s oldest travel agent with a weakened balance sheet. Management said in February that the company is seeking to sell its airline arm to help pay off debt after banks agreed to amend covenants on the credit facility in 2019 and 2020.

An external representative for Fosun Tourism Group said the company doesn’t comment on market speculation.

European Union regulations preclude airlines based in the bloc from being owned by non-European shareholders, meaning China-based Fosun wouldn’t be allowed to buy that part of the business.

Deutsche Lufthansa AG has expressed an interest in Condor, the part of Thomas Cook’s airline that operates in Germany. The company’s chief executive officer, Carsten Spohr, said in an earnings call last month that he was interested in owning the business, either through an acquisition or a breakup of Thomas Cook.

The other part, Thomas Cook Airlines, is based in Britain. Together, the two airlines had 2018 revenue of 3.52 billion pounds ($4.6 billion). Earnings before interest and taxes has been growing, while it’s dropped at the company’s tour-operating arm.

Stock, Debt

Shares of Thomas Cook rose 18 percent, the most since Dec. 5 on Tuesday, to 28.99 pence in London, giving the company a market of 445 million pounds. The company has 1.4 billion pounds of total debt.

Bloomberg News reported last week that one of Thomas Cook’s bank lenders was unable to sell 25 million pounds of exposure at a 30 percent discount. However, the company’s 750 million euros ($843 million) of bonds due June 2022 gained 5 cents on the euro to 77 cents on Tuesday, the highest since March 29, according to data compiled by Bloomberg.

AlixPartners is working with Thomas Cook to help repair its balance sheet, Sky said. FTI Consulting is advising a group of lenders, according to the news outlet.

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