Thomas Cook closes in on new debt deal

By PETER CRIPPS
Published on 10/04/2012 00:00

STRUGGLING travel giant Thomas Cook yesterday confirmed it was close to thrashing out a deal to secure its future.

The 170-year-old company said it is in “advanced discussions” with lenders, including Royal Bank of Scotland and Barclays, to agree a refinancing expected to extend the maturity of its bank loans to 2015.

The group is also considering selling some of its 90 aircraft to raise further cash as part of a “sale and leaseback” deal that would see it rent them from the buyers.

The deal with its banks would provide the firm with stability following a period of crisis last year when it suffered three profit warnings, the departure of its chief executive and was forced to take an emergency £200 million loan. However, it has been reported 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.

It is thought that talks involving the banks and interim chief executive Sam Weihagen will be completed in coming weeks, while the group said it will update on its strategic review by the time of its interim results, which are expected by the end of May.

Thomas Cook, which has an annual turnover of £9 billion and 30,000 employees, had estimated debts of £1.25bn at the end of September. It plans a raft of asset sales to raise money to pay down its borrowings, including offloading the company’s stake in the air traffic control group Nats.