Thomas Cook, the struggling package holiday group, has secured its future with a £1.4bn debt-refinancing deal.
The quoted group announced this weekend that it had extended its financing by two years to May 2015. The deal with its lenders gives Thomas Cook a more stable capital structure and the flexibility to repay its debt when it has the cash to do so.
The company suffered a terrible 2011, with families cutting back on holidays as the UK economy tightened. The chief executive, Manny Fontenla-Novoa, left the 170-year-old company last summer, when it was forced to approach its 17 banks for new financing. It needed a £200m rescue package in November.
The company has yet to name a permanent replacement for Mr Fontenla-Novoa, though the chairman, Frank Meysman, said yesterday the search for a boss was "progressing well". Mr Fontenla-Novoa's deputy, industry veteran Sam Weihagen, has taken on the top role in the interim.
He said that the board "continued to make good progress in strengthening the group's financial position".
This "progress" includes selling off some assets. The group confirmed that it is close to a sale-and-leaseback of between 17 and 19 of its 91-strong fleet of aircraft. It is thought that this deal could raise around £100m.
Thomas Cook is also selling a 51 per cent stake in Hoteles Y Clubs De Vacaciones, which indirectly owns a golf club and several Spanish hotels. The deal will cut its debt by around £75m.
A circular to get shareholder approval for both of these deals will soon be distributed to investors ahead of the annual meeting later this month. To date, the group has cut £135m from net debt in its attempts to turn the business around.
The travel agent has also vowed to conduct a review of its poorly performing businesses in Russia, Canada and France. In the statement accompanying the refinancing announcement, Thomas Cook said that there was "substantial scope to improve the results of these businesses", but warned that French "market conditions remained very challenging".
Thomas Cook shares closed at 21p on Friday; a year ago they were worth more than 170p.