Thomas Cook in rescue talks with China's Fosun

A Thomas Cook Airbus A330 aircraft prepares to take off from Manchester Airport in Manchester Britain

A Thomas Cook Airbus A330 aircraft prepares to take off from Manchester Airport in Manchester Britain

If agreed, the new funding would help Thomas Cook to continue trading through the winter and allow it to invest in the future of the business.

Thomas Cook chief executive Peter Fankhauser.

Fosun Group is already a minority investor in Thomas Cook - with a stake of about 18 percent - and owns French luxury holiday resort group Club Med SAS, which it bought for more than US$1 billion in 2015.

'While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees, ' Fankhauser added.

The world's oldest travel company has been battered by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, which deterred bookings. But Thomas Cook has offered an olive branch to existing shareholders if the agreement is ratified, and said they may be able to "participate in the recapitalisation".

As part of the deal to keep afloat the package holidays firm is suggesting a debt-for-equity swap with lenders that will likely virtually wipe out what's left of any value for now shareholders.

Analysts said Thomas Cook's predicament showed how businesses needed to be careful with their balance sheets, particularly in sectors with unpredictable costs and earnings.

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The travel group now has debts of £1.25bn compared to a market value last night of about £204mln. "Every year we have to sell 3 million holidays before we have our interest burden paid", he told reporters.

Other tour operators are also facing challenges and in May Anglo-German rival TUI reported deeper first-half losses due to airline overcapacity for Spain and the grounding of its Boeing 737 MAX planes.

Shares in Thomas Cook were down 43.5% to 7.42 pence by 0730 GMT on July 12.

Thomas Cook's stock has halved in value so far this year, with a current value of about Dollars 255 million.

It is one of China's so-called "grey rhino" companies - along with Wanda, HNA and Anbang - that have come under growing scrutiny in the last few years from mainland authorities wanting to crack down on debt-fuelled foreign acquisitions.

Thomas Cook's recapitalisation proposal, which may comprise a capital injection and new financing facilities, comes a month after it said it was in talks with Fosun following the Chinese firm's preliminary approach.

The troubled travel operator says it is in "advanced discussions" about a possible £750 million cash injection by Chinese investment firm Fosun.

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