HONG KONG/LONDON (Reuters) – Thomas Cook is negotiating a 750 million pound ($941 million) rescue that will give Fosun Tourism, its biggest investor, control of the indebted British group’s package-tour business, in a blow to other shareholders.

The company’s shares fell more than 45% to their lowest-ever level on news of the proposal, which would give Club Med owner Fosun a minority stake in Thomas Cook’s airline business.

“This comes at a cost, with a significant dilution for existing shareholders,” Chief Executive Peter Fankhauser said, adding it was a “pragmatic and responsible solution to secure the future of the Thomas Cook business and brand”.

Fosun International, co-founded by billionaire Guo Guangchang and one of China’s biggest conglomerates, has spent billions of dollars over the past decade on healthcare, tourism and fashion companies in the United States and Europe.

“We are committed investors, with a proven track record of turning around iconic brands including Club Med and Wolverhampton Wanderers FC,” Hong Kong-listed Fosun, which already owns an 18% stake in Thomas Cook, told Reuters.

Thomas Cook said that the cash from the proposed deal, which would mark one of the most significant purchases of a British company by a Chinese group in years, would be enough for it to trade over the winter season and give it flexibility to invest.

The world’s oldest travel company, which has been hit by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, has also been weighing approaches for its airline business and Nordic operations.

Fankhauser said the sale of the airline business was paused while Thomas Cook focused on the refinancing, adding it was “too early to speculate on what will happen on the airline review”.

The proposal, which is subject to due diligence and further talks, will see a significant amount of Thomas Cook’s debt, which Refinitiv data shows stands at 1.8 billion pounds, converted into equity, almost wiping out existing shareholders.

Fankhauser said the proposed deal with Fosun and lenders would put the firm on a “totally different financial footing” with “massively reduced debt levels”.

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.

Fankhauser said the group had paid 1.2 billion pounds in interest and refinancing costs on around 1.6 billion pounds of debt since 2012. “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 trading down 46% at 7.1 pence on Friday, valuing its equity at 109 million pounds ($137 million).

The 178-year-old company had seen its market value drop from around $4 billion when it made its debut on the London market in June 2007, as weak demand led to increased promotional activity and earlier discounting than usual.

DEAL DETAILS

The British holiday company’s tour business had 11 million customers in 2018 and produced 7.4 billion pounds in revenue. Its higher-margin airline business – which includes German holiday carrier Condor – had revenue of 3.5 billion pounds.

Thomas Cook said summer bookings in its tour operations business were down 9%, while those at its airline business are down 3%, likely leading to operating profit in the second half of the year coming in lower than the year-ago period.

The proposal comes a month after it said it was in talks with Fosun following a preliminary approach.

Tourism is viewed as key to China’s shift towards a more consumption-driven economic model from an investment and export-led one, but buyers like HNA Group and Fosun have faced scrutiny from Beijing for debt-fuelled, big-ticket foreign deals.

Fosun said earlier this year that it will adopt an asset-light strategy and run under management contracts the Club Med resorts it plans to launch in China and other countries.

($1 = 0.7977 pounds)