Like a bargain-hunting holiday maker finally deciding to pounce on a cut-price getaway, Fosun International Ltd.’s long game for Thomas Cook is set to pay off. It is poised to lead a 750 million-pound ($940 million) capital injection that will give it control over the struggling tour operator’s prime asset.

The recapitalization by a debt for equity swap secures the future of the travel agency. Putting its finances on a stronger footing should reassure consumers and prevent a further slide in trading. But there will be little left for long-suffering shareholders.

There is no guarantee the plan will go ahead. But if it does, Fosun will acquire a significant controlling stake in Thomas Cook’s tour operating business, and will also have a minority holding in its airline, without paying a takeover premium.

Fosun has been a shareholder in Thomas Cook since 2015, so it could have made an offer at any time. Investors could be forgiven for thinking that it could feasibly have put them out of their misery sooner.

But its not hard to see why things have come to this point. Thomas Cook’s significant deterioration over the past 12 months limited the field of possibilities.

The slide in the share price meant acquiring the equity, even with a takeover premium, wouldn’t have cost too much. At the close of trading on Thursday, the company had a market capitalization of about 200 million pounds.

The trouble is, the net debt had soared to 1.25 billion pounds as of March 31, inflating the overall take out value. With trading continuing to suffer, Thomas Cook’s business may just not have been worth it. The change of control clauses in the two main bonds would have further complicated an outright purchase. The need to find a partner to complete a takeover that included the airline presents an additional hurdle. 

For some time now the stocks and bonds have been little more than options on the company avoiding the worst case scenario: collapsing under its mountain of debt and consumers’ reluctance to book holidays with it.

While this hasn’t happened, neither has an outcome that could have created significant value for equity investors.

Shares in Thomas Cook sank almost 50% on Friday on the prospect of investors being heavily diluted. They may end up with a holding in a better capitalized business. But after the shares lost 90% over the past 12 months, its unlikely that will have much appeal.

As for owners of Thomas Cook’s bonds, they have accepted for several weeks the inevitable fate that the debt will be converted into equity. The prices on the 1.15 billion-euros ($1.3 billion) of securities due in 2022 and 2023 say it all. They plummeted from modestly above par as recently as November to a distressed rump value area of around 35 cents by mid-May as all hopes evaporated that the full value of capital would be returned.

With a marginally better-than-expected outcome the bond prices did move up on the news but have only held onto half the gains, suggesting there was little faith in a turnaround.

The recapitalization is only a proposal right now. There is likely to be some negotiation with both bondholders and shareholders on the exact terms.They may be able to squeeze out a little more.

In this deal, it looks like Fosun will get the best positioned sun lounger round the swimming pool. But as my colleague Nisha Gopalan has noted, it still has to make its investment in Thomas Cook pay. Given the scale of decline over the past year, that will not be easy.

--With assistance from Marcus Ashworth.

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Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.

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