Goodness this looks messy, but then it was always going to be.
From the moment Thomas Cook unveiled a plan to restructure the company which involved a myriad of banks, bondholders and shareholders accepting extraordinary losses it was clear that finding common ground would be ferociously difficult.
And remember, we are in The Leaking Hour, that moment before midnight when rival factions jostle for position by making private details public.
It’s a moment journalists love but every disclosure is designed to advance a vested interest.
The threats to walk away could be serious, they could also be posturing. We’ll find out soon enough.
Thomas Cook announced the details of the restructuring of the troubled group on August 28th.
All sides were supposed to have signed up, in principle if not in practice.
The Chinese conglomerate Fosun would inject £450m into Thomas Cook in exchange for a stake of at least 75% stake in the tour operator and a stake of up to 25% in the airline.
The core lending banks and bondholders would match the investment in exchange for 25% of the tour operator and 75% of the airline.
The other Thomas Cook shareholders would be diluted but the pain was being shared and the company would have another shot at survival.
The scene was set for a formal vote to approve the rescue deal at the end of September but since then positons have shifted.
Last Monday, the banks (among them RBS, Barclays and Lloyds) informed Thomas Cook that independent analysis by FTI had concluded that the £900m the restructuring is set to raise isn’t enough.
An additional £200m is needed. Fosun disagrees and is refusing to dig deeper. Thomas Cook has sought alternative sources of funding but without success so far.
There are other disagreements raging. Bondholders were keen to minimise their risk by swapping their proposed stake in Thomas Cook the tour operator for a stake in Fosun Tourism Group.
Conversations ended without agreement a week ago. Bondholders say they now prefer to take their chances in administration.
A deal that was thought to be done is being frantically renegotiated and Thomas Cook is fighting to keep everyone at the table. The mood music is awful but they may yet succeed.
If they don’t the consequences are profoundly dire.
In the event of administration, the group will cease trading immediately.
Some 500,000 customers (150,000 of them British) will find themselves temporarily stranded; the taxpayer will fund an expensive repatriation effort; 20,000 employees (9,000 of them in the UK) will lose their jobs; shareholders (including Fosun) will be wiped out and the group’s assets (the few aircraft and hotels that Thomas Cook owns, and the brand itself) will be sold to raise money for creditors.
It’s unthinkable that banks and bondholders will get back anything like the £1.7 billion they are owed.