UPDATE 1-UK's Thomas Cook hunts for $250 mln to fend off collapse

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LONDON, Sept 20 (Reuters) – Britain’s Thomas Cook said its banks had ordered the company to find an additional 200 million pounds ($251 million) of funding in order to guarantee the survival of the world’s oldest holiday company.

Thomas Cook agreed the key terms of a 900 million pound ($1.1 billion) recapitalisation plan in a deal with Chinese shareholder Fosun last month, but on Thursday a source said that lenders were demanding another 200 million pounds in underwritten funds to maintain their support.

“Discussions to agree final terms on the recapitalisation and reorganisation of the company are continuing between the company and a range of stakeholders,” it said in a statement.

“These discussions include a recent request for a seasonal standby facility of 200 million pounds, on top of the previously announced 900 million pounds injection of new capital.”

A source close to the discussions said on Thursday that Royal Bank of Scotland (RBS) had hit Thomas Cook with a last minute demand for the extra funding, adding that the situation “was becoming more critical”.

A spokesman for RBS said the bank did not “recognise this characterisation of events” and was working with all parties to “try and find a resolution to the funding and liquidity shortfall at Thomas Cook.”

Under the original terms of the plan, Fosun – whose Chinese parent owns all-inclusive holiday firm Club Med – would contribute 450 million pounds ($552 million) of new money in return for at least 75% of the tour operator business and 25% of the group’s airline.

Thomas Cook’s lending banks and bondholders were to stump up a further 450 million pounds and convert their existing debt to equity, giving them in total about 75% of the airline and up to 25% in the tour operator business, the group said.

“The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery,” Thomas Cook said on Friday.

“The Company will provide further updates in due course.”

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