Thomas Cook plans rescue deal with Chinese shareholder Fosun – is your holiday safe?
TROUBLED travel company Thomas Cook has agreed a rescue deal with Chinese firm Fosun to secure the company's future.
Thomas Cook plans to sell the majority of its tour operator business and a stake in its airline business to Fosun, which is already the company's largest shareholder.
The Chinese firm announced it will contribute £450million of new money to the UK travel firm and buy 75 per cent of the company's tour operator business and 25 per cent of its embattled airline business.
Group lenders and bondholders will stump up around £450million as well.
It's hoped the deal will go through by early October but the holiday firm says it is still subject to a number of conditions, including performance, due diligence and credit approvals.
Thomas Cook says customers with bookings will not be affected by the restructuring deal, and you can continue to buy flights or packages as normal.
Is my Thomas Cook holiday safe?
THOMAS Cook is stressing that holidays will still go ahead and that they can be booked as usual.
All Thomas Cook holidays are ATOL protected.
It's a legal requirement that every UK travel company which sells package holidays holds an Air Travel Organisers' Licence - or ATOL.
ATOL protection means that customers won't be stranded abroad if the company goes bust and they will be refunded for trips that can't go ahead.
However, it's worth pointing out that flight-only bookings with Thomas Cook don't enjoy the same protection.
As part of the Thomas Cook business is being sold, you may notice some changes to your holiday, such as the dates, hotel or flight times.
Martyn James from complaints firm Resolver says that if you're not happy with the changes then "you should be able to cancel without penalty".
Holidays booked with a credit card may also be able to get a refund for cancellations from their card providers under Section 75 of the Consumer Credit Act.
This is because card providers are jointly liable when a purchase or service isn't fulfilled but it only kicks in if you paid at least £100 on credit card.
If you paid less than £100 on credit card or if you paid for your flights on debit card, you may be able to get a refund via a scheme called Chargeback but there's no guarantee.
The travel company's holidays are ATOL protected, which means passengers won't be stranded if the company goes bust and they will be refunded for trips that can't go ahead.
Its airline business doesn't enjoy the same protect but you should be able to get your money back from your card provider if anything goes wrong with the booking - see the box above for more information.
The deal comes after Thomas Cook said last month that Fosun was in talks to provide a £450million contribution as part of a £750million cash injection, alongside lenders and bondholders in a bid to secure the future of the company.
But in a blow to investors, Thomas Cook has today confirmed that although shareholders will retain an investment in the company as part of the deal, shareholdings in the reorganised company will be "significantly diluted".
Thomas Cook's share price stood at 7.08p at the closing of the markets yesterday, down from 81.70p this time last year.
The share price has tumbled over the past ten years from £2.34 back in 2009.
More on Thomas Cook
Despite the move, Thomas Cook says it plans to maintain its listing on the London Stock Exchange.
Thomas Cook has suffered recently as a result of mounting debts, reporting a £1.2billion net debt in its half-year results in May.
It has also been hit hard by an influx of online competitors, which has resulted in oversupply, forcing tour operators to cut prices.
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