Thomas Cook closes in on £1.2bn loan extension

Click to follow
The Independent Online

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.

Comments