MyTravel put close to edge by delay on £250m loan

Travel woes: Holiday company delays results as talks with bankers continue

MyTravel, the stricken tour operator, yesterday extended the charade that has become its financial future by failing to release its annual results. This was in spite of earlier assurances that it would meet the reporting timeframe it set out back in the rose-tinted days when it went by the name of Airtours and still enjoyed credibility as an investment grade holiday company.

MyTravel, the stricken tour operator, yesterday extended the charade that has become its financial future by failing to release its annual results. This was in spite of earlier assurances that it would meet the reporting timeframe it set out back in the rose-tinted days when it went by the name of Airtours and still enjoyed credibility as an investment grade holiday company.

There was a suggestion from some quarters in the City that the group, which is striving to hammer out a crucial new overdraft facility with its bankers, could release its figures as soon as today, but as Greg Johnson, at ING Financial Markets, said: "Given their track record I take everything this company says with a large pinch of salt."

The timing of MyTravel's confession that its results would be late prompted further criticism about the company's attitude to the investor community. It waited until yesterday morning to admit that discussions with its bankers were proving tougher than anticipated to wind up. One shareholder called the delay "irresponsible and stupid", adding: "They are clearly not learning anything whatsoever about managing market expectations."

In a terse statement, MyTravel said it was in "well advanced discussions" with its lending banks and that it "expects to sign agreements shortly". The company promised to release its preliminary figures "immediately thereafter".

The crux of the company's financial woes – aside from the odd £50m black hole in its accounts – is a three-year £250m revolving credit facility that runs out in March. MyTravel needs its bankers to agree to an extension in order for its auditors to certify that it is a going financial concern. MyTravel needs the money to pay its day-to-day operating expenses through the winter, traditionally a bleak, low season period for tour operators. Deloitte & Touche, which undertook to review the MyTravel books after the demise of Andersen, is understood to have completed its audit leaving only the bankers' signatures between the company and the publication of its accounts.

The City has been clamouring for the figures since the middle of October, when the group stunned the market by issuing its third profits warning of the year and revealing that its accounts could be more prudent to the tune of £50m. The warning came hot on the heels of a September admission that its auditors had clamped down on previous aggressive accounting policies that had seen the group book profits from selling travel insurance with its holiday packages as soon as a policy was sold. MyTravel was told it must instead wait until a customer's date of departure.

To date the collapse in the group's fortunes, which came during a year that was tarred with the fallout from 11 September, has claimed just one executive scalp. Tim Byrne, the chief executive and former finance director, left the company last month after presiding over what has turned into the most ignominious few years in the company's 30-year history. But despite repeated calls from institutional shareholders – many of whom have since abandoned the group to the hedge funds and speculators – for other heads to roll, both David Jardine, the finance director, and David Crossland, the founder and chairman, have clung on.

In theory, Mr Crossland, who spent three decades building an obscure two-shop agency into Britain's largest tour operator, should by now be enjoying the high life of a retired multimillionaire but he chose to stay at the helm in an attempt to ease investor concern. Commenting on his – and the company's – decision to hide from the media and the City since the last profit warning, one shareholder said: "He has earned himself no friends."

As well as a new banking facility, MyTravel was due to update the market on a strategic review instigated by Peter McHugh, who formerly headed the group's North American business before being thrust into the top slot last month. MyTravel, which is being circled by private equity groups and rival holiday companies, is looking at ways to raise funds by selling off certain "non-core assets", although disposals talks are thought to have stalled while attention focuses on the credit facility. Mr Jardine – himself a former Andersen partner – is also expected to resign.

Most analysts were prepared to give the company one last chance – with the proviso that its future hinged on whether customers had twigged that the owner of the travel agency chain Going Places and holiday brands such as Bridge and Cresta Holidays was one and the same thing as MyTravel. "The future is not necessarily that rosy but survival was the key and it's looking like they should be able to achieve that," James Hollins, at WestLB Panmure, said. Others were less optimistic. "It's a penny stock in all senses of the word. It's for hedge funds and speculators only," another analyst said. The group's shares, down 2p to 31p yesterday traded at 283.5p earlier this year.

Even assuming MyTravel sorts out its winter cash flow position, it has a raft of pressing issues longer term. The group has estimated debts of about £485m and operating lease commitments that, according to some forecasts, if capitalised would amount to some £900m. It also has preference share liabilities (quasi equity that behaves like debt) of £210m that carry an interest rate of 7.5 per cent and needs to refinance £230m of outstanding convertible bonds before they expire in January 2004.