Thomas Cook close to deal with its banks

By GRAEME EVANS
Published on 09/04/2012 01:54

Travel giant Thomas Cook is closing in on a deal that should help secure the struggling group’s future.

Lenders including Royal Bank of Scotland and Barclays are near to approving a refinancing that will extend the maturity on bank loans to 2015, according to a weekend newspaper report.

However, it is thought that the consortium of 17 banks will extract a heavy price for the new loans by including the right to take 5 per cent of the company’s shares, as well as higher interest and a one-off fee.

Thomas Cook, which has an annual turnover of £9 billion and about 30,000 employees, was in crisis last autumn before banks stepped in with an emergency £200 million loan.

It followed a disastrous year including three profit warnings, the departure of its chief executive and an earlier £100m bail-out from its banks.

Quoting debt specialist Capital Structure, the newspaper report said Thomas Cook had total debt of £1.25bn at the end of September 2011.

A raft of asset sales are planned to raise money to pay down debt, including the company’s stake in the air traffic control group Nats.

It is thought that talks involving the banks and interim chief executive Sam Weihagen over the new long-term loans will be completed in the coming weeks.

A source close to the lenders said: “Securing its banking facilities will give stability and confidence to the firm.”

Thomas Cook shares tumbled below 10p at the end of last year but have recovered to 20.5p since then.

It recently announced a 2 per cent fall in summer bookings in Britain, but said a new advertising campaign has lifted the performance in recent weeks.