MyTravel on way to June bank deal despite £100m hit

Mytravel, the troubled tour operator, yesterday told investors to expect a hit of more than £100m after revealing that most of its aircraft, hotels and cruise ships had been overvalued in its books.

The group, unveiling the results of a strategic review, also said its debts would increase by £210m after it transferred a controversial financial instrument on to its overdraft, ahead of completing a broader refinancing.

Peter McHugh, who took over as chief executive late last year after his predecessor was ousted, said talks to refinance about £500m of debt and secure the group's long-term future were progressing well. "My expectation is that we will have everything completed by June," he said.

The plan is to push repayment dates on the group's debts and bonds back to 2006 and 2007, Mr McHugh revealed, adding: "The idea is to stabilise the company and bring it back to profitability so it can regain its position of prominence in the UK."

MyTravel, formerly known as Airtours, came close to collapse last year after unveiling a black hole in its accounts. A string of executives, as well as its founder and chairman, David Crossland, left the group.

"We looked at the company upside down and backwards, at different perspective from before," Mr McHugh said, commenting on the strategic review. He said the asset write-downs would be "significant, probably more than £100m". After accounting for the £210m minority preference share as debt rather than equity, the group's net assets will reduce from £387m to £177m, he added.

In a trading update, MyTravel echoed the optimism expressed by its rival First Choice earlier this week, describing bookings over the past two weeks as "encouraging". But after a slump in demand during the war in Iraq, it warned it still had "ground to make up" in a number of its markets.

The group, which kicked off its slide into financial turmoil a year ago by warning of 1 million unsold holidays, said UK bookings for this summer were ahead by 3 per cent. It has 500,000 fewer peak season holidays left to sell in the UK compared to a year ago, or 40 per cent of its summer charter capacity remaining.

"I think we're in a good position to be successful this year. But it's only the beginning of the recovery," Mr McHugh said. The shares rose 25 per cent to 14p.