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Fitch: Thomas Cook on positive watch
Fitch Ratings said it placed Thomas Cook Group plc's long-term foreign-currency issuer default rating and senior unsecured rating on Rating Watch positive.
Fitch also said it assigned expected ratings of B+ with recovery rating of RR3 to the new €525 million unsecured notes issued by Thomas Cook Finance plc that will be guaranteed by Thomas Cook Group.
The RR3 recovery rating indicates 51% to 70% expected default recovery.
When the announced refinancing plan is completed, Fitch said it expects to upgrade the company's issuer default rating to B from B- and assign a positive outlook.
The agency also said it expects the group's existing senior unsecured debt to be upgraded to B+ with a recovery rating of RR3.
This follows news of the group's £1.6 billion new refinancing plan, Fitch said.
The plan's new bank debt, senior unsecured notes and equity issuance are fully-underwritten, the agency said.
The potential for upgrades is due to an expectation that the refinancing and the already-announced group "transformation plan" are likely to result in a further improvement in both the group's profitability and adjusted leverage ratios, Fitch said.
Likewise, the positive outlook reflects upside potential, albeit constrained at that point by further inherent execution risks associated with the full realization of the results of the company's transformation plan, the agency said.
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