HONG KONG/LONDON (Reuters) – Thomas Cook (TCG.L) is in talks on a 750 million pound ($941 million) bailout that will give its largest investor Fosun Tourism (1992.HK) control of the indebted British group’s package-tour business, in a blow to other shareholders.

Shares in Thomas Cook dropped by more than 30% to their lowest level on record after news of the proposed deal, which would also give Club Med owner Fosun a minority interest in Thomas Cook’s airline business.

“This comes at a cost, with a significant dilution for existing shareholders, many of whom have held the stock and supported the business for many years,” Thomas Cook Chief Executive Peter Fankhauser said of the proposed deal.

“However, this proposal is the pragmatic and responsible solution to secure the future of the Thomas Cook business and brand and to preserve as much value as possible for all our stakeholders,” Fankhauser added.

Fosun International (0656.HK), co-founded by billionaire Guo Guangchang and one of China’s biggest conglomerates, has spent billions of dollars over the past decade buying 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 process for the airline business was paused while Thomas Cook focused on the refinancing. “It’s too early to speculate on what will happen on the airline review,” he said.

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

178-year-old Thomas Cook has seen its market value drop from around $4 billion when it made its debut on the London market in June 2007 to about $255 million before the bailout plan.

Its stock had more than halved in value so far this year after several profit warnings as weak demand led to increased promotional activity and earlier discounting than usual.

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 – made 3.5 billion pounds in revenue.

The company on Friday 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.

DEAL DETAILS

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

Fosun has been purchasing tourism assets including France’s Club Med, as the industry is viewed as key to China’s shift toward a more consumption-driven model of economic growth from an investment and export-led one.

But like its domestic peers including HNA Group, Fosun, China’s largest privately held conglomerate, has faced increasing scrutiny from Beijing for debt-fuelled, big-ticket foreign deals in recent years.

It 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.

The proposal, which Fosun said was subject to due diligence and further talks, envisions that a significant amount of its external bank and bond debt will be converted into equity.