The struggling tour operator MyTravel yesterday embarked on selling off its North American travel interests, raising an initial £67.1m to plug a hole in its balance sheet.
The company, formerly known as Airtours, has clinched a deal to sell its US cruise arm to National Leisure Group, a privately owned rival, for £65.9m. It also sold two loss-making US tour operators, SunTrips and Vacation Express, for £9.9m, which it will receive in phases over the next seven years.
MyTravel, which paid £241m for its US businesses three years ago, plans to use the net proceeds to bankroll its operations during the traditionally tough winter months. Peter McHugh, the chief executive, said the board felt it was "necessary to ... raise cash through divestment to provide sufficient working capital" for the group.
Analysts were divided over the amount raised for the cruise distributing business. One said the cash "would be helpful", while another called the price "poor". He added: "The City had been expecting MyTravel could get£200m for the whole of its US arm, yet it only raised £65m selling more than half of it."
MyTravel still has US businesses to sell, including Auto Europe, a car rental business, and Lexington Services, a web-based booking service. In Canada, it owns Sunquest and Alba, two all-inclusive tour operators, and MyTravel Retail, which includes a 110-strong chain of travel agencies. In a brief accompanying trading update, the company said bookings for this winter and next summer were "satisfactory" and margins were "acceptable".
MyTravel recently nailed a crucial refinancing deal that will give it a three-year breathing space to emerge from a disastrous 15 months which saw it part company with its entire executive board and amass £550m of losses in its first half.
It issued a cautious assessment of its chances of turning the business around yesterday. "The group's earnings and cash flows will remain subject to significant risk through its high fixed cost structure and high levels of indebtedness and the group will have to continue to manage its resources carefully."
It signalled further disposals were likely, as part of the "significant steps" it needed to take to ensure it had enough working capital to help balance the huge swing into deficit the group suffers during the winter when it has to pay suppliers such as hotels. The disposals are conditional on shareholder approval. Its shares closed up 1.25p at 17.5p.Reuse content