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Thomas Cook Attracts Offer From Triton for Scandinavian Arm

Lucca de Paoli and Tara Patel
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Thomas Cook Attracts Offer From Triton for Scandinavian Arm

(Bloomberg) -- Thomas Cook Group Plc received an offer from private-equity firm Triton Partners for its Scandinavian arm, providing a potential boost to the beleaguered U.K. holiday company that is trying to raise cash.

The world’s oldest travel agency is evaluating the “highly preliminary and unsolicited” offer for its tour operator and airline business in Norway, Sweden, Finland and Denmark, according to a statement. Thomas Cook also said it’s considering multiple bids for parts or the whole of its airline operation.

“There can be no certainty that a transaction will be concluded with Triton Partners,” the London-based company said. Sky News first reported the bid and said it could be worth several hundred million pounds. Thomas Cook shares rose as much as 8.6%.

A sale of businesses could give Thomas Cook some breathing room after S&P Global Ratings and Fitch Ratings on Wednesday pushed the credit score deeper into junk territory, citing the company’s weak trading and high levels of indebtedness. Earnings may continue to deteriorate and the debt pile could rise to an “unsustainable” level, S&P analysts said, triggering renewed selling pressure on the stock that has already lost 90% this past year.

Thomas Cook is grappling with a tough operating environment in European travel that’s also knocked chief rival TUI AG. The Nordic business, like the rest of the group, has endured a difficult period. Bookings for the summer are running behind availability even after capacity cuts, with trading in Sweden is particularly difficult, it said last week.

The northern operation includes Ving, a leading Swedish tour operator selling charter trips, cruises and package tours to places like Spain, Tunisia and Turkey, and Spies, the owner of Denmark’s largest tour operator. Thomas Cook also runs a regional airline, but has no actual Nordic stores, compared with a network of 566 in the U.K.

Triton’s interest could stem from the purchase last year of Sunweb Group, a Swiss and Dutch online package-tour operator. The investor said it wanted to “explore opportunities for geographic expansion.”

Selling at least part of the airline operation, which carries 20 million passengers annually to sunspots around the Mediterranean, is crucial to the company’s survival because a new 300 million-pound ($379 million) loan announced last week is conditional on making progress with a disposal.

The carrier may not attract as high a price as management hopes because of “overcapacity” in the discount-flights sector, S&P said in its report late Wednesday, echoing earlier comments from Citigroup Inc. analysts.

Ryanair Holdings Plc Chief Executive Officer Michael O’Leary was even more blunt this week, referring to Cook’s airline arm as a “dog” worth little beyond the value of airport landing slots. Citigroup’s James Ainley, who has predicted a company-wide debt restructuring may be necessary, estimates the unit is worth 400 million pounds or less after aircraft-lease debt is repaid.

Thomas Cook closed 2.1% higher at 12.47 pence, valuing the company at 192 million pounds. It earlier fell 10% following the ratings downgrades.

(Adds details about Nordic operation and.)

--With assistance from Sarah Syed and Thomas Beardsworth.

To contact the reporters on this story: Lucca de Paoli in London at gdepaoli1@bloomberg.net;Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper

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