Club Med Southern Africa has confirmed the signing of long-term financing by its global company Club Med, for a total amount of €260 million to secure liquidity and future development.
The financing comprises of a €180 million loan agreement, guaranteed by the French State with the support of a pool of French banks, and a €80 million shareholder loan agreement from Fosun Tourism Group.
Club Med entered the Covid-19 crisis with a strong business model generating profitable growth, a positive free cashflow and a solid financial position.
In 2019, on a comparable exchange rate basis, the business volume of Club Med resorts grew by 5%, thanks to the global upscale strategy and growth in digital sales. On the financial side, the free cashflow was positive for 3 consecutive years.
January and February 2020 performed very well, with a business volume up by 8% compared to the first two months of 2019. The €300 million credit line negotiated in August 2019 and the liquidity available at the end of March, at more than €200 million, put the company in a strong financial position when the crisis surged.
Covid-19 had global consequences across all sectors of activity. The hospitality sector (tourism, hotel and transportation) was particularly affected. This crisis brought Club Med's activity almost to a standstill for three months and in April, for the first time in its 70-year history, all resorts were temporarily closed.
Club Med decided to adapt fast to protect its clients, teams and cash situation, and to be ready to rebound once the pandemic is under control allowing its activity to resume fully.