He added: "After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing, the Board has made a decision to move forward with a plan to recapitalise the business, supported by a substantial injection of new money from our long-standing shareholder, Fosun, and our core lending banks".
If agreed, the new funding would help Thomas Cook to continue trading through the winter and allow it to invest in the future of the business.
In a communication to staff, the CEO Peter Frankhauser admits that Thomas Cook had operated with "too much debt for too long" meaning that a deal of this kind with Fosun was the only "responsible" thing to do.
'We are committed investors, with a proven track record of turning around iconic brands including Club Med and Wolverhampton Wanderers FC, ' Fosun, which already owns an 18% stake in Thomas Cook, told Reuters.
As part of the potential deal, Thomas Cook's largest shareholder Fosun Tourism Group would acquire a significant controlling stake in Thomas Cook's tour operator division and a significant minority internet in the airline business.
In a separate trading update, Thomas Cook said is summer 2019 programme was 75% sold, slightly ahead of the same period past year.
The world's oldest travel company has been battered by fading demand for its package holidays, high debt and a hot 2018 summer in Europe, which deterred bookings.
Lenders are also said to have agreed to convert a significant portion of Cook's bank and bond debt into equity.
Thomas Cook's stock has halved in value so far this year, with a current value of about United States dollars 255 million.
The company on Friday said summer bookings in its tour operations business were down 9 per cent, while those at its airline business are down 3 per cent, likely leading to operating profit in the second half of the year coming in lower than the year-ago period.
Shares in Thomas Cook were down 43.5% to 7.42 pence by 0730 GMT on July 12.
A spokesman for Fosun said: "Fosun is a shareholder in Thomas Cook, because it is a British company operating in the global travel industry, in which we have extensive experience".
It is one of China's so-called "gray rhino" companies - along with Dalian Wanda Group Co (萬達集團), HNA Group Co (海航集團) and Anbang Insurance Group Co (安邦保險集團) - that have come under growing scrutiny in the past few years from Chinese authorities wanting to crack down on debt-fueled foreign acquisitions.
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.