Thomas Cook, the beleaguered travel operator, appeared to buy itself two more years of breathing space yesterday announcing it was close to a £1.2bn deal with its banks.
Just months after its last refinancing, the debt-laden firm said it was in "advanced discussions" with its 17 lenders, including Royal Bank of Scotland and Barclays, in a deal that would extend the repayment of its loans by two years until 2015.
Britain's oldest and best-known tour operator is expected to have to pay dearly for the extension, however. It is thought likely to give the consortium 5 per cent of the company's shares, pay a higher interest rate and possibly also a one-off fee.
"Thomas Cook confirms that it is in advanced discussions with its banking group about extending its financing arrangements," the company said in a statement.
"In addition to the revised financing arrangements, the previously announced asset disposal programme and the sale of Thomas Cook India, the group is exploring a possible sale and leaseback of certain aircraft," it added.
Thomas Cook is struggling as the recession hits demand for its main business – short-haul holidays for middle class British families – which, in turn, makes it hard for it to meet its hefty interest repayments.
Thomas Cook will hope that the refinancing draws a line under a turbulent 12 months which has seen three profits warnings leave the group on the brink of collapse.
Manny Fontenla-Novoa resigned in August last year as the group's position deteriorated and was replaced by Sam Weihagen.
An emergency £200m loan brought the group some respite at the end of November, but trading has continued to be tough as the travel market struggles with a bookings slumped.
Shares in Thomas Cook, which have fallen by nearly 90 per cent in the past 12 months, are likely to rise today as a result of the deal.Reuse content