Thomas Cook chips in with Spanish hotel sale

EMBATTLED travel operator Thomas Cook has sold off its 51 per cent stake in a Spanish hotels and golf club business in a move that will reduce its £1 billion debt pile by around £81 million.

The €72.2m (£60.8m) sale of its holding in “Hoteles Y Clubs De Vacaciones” (HCV) to the hotel division of Spanish group Iberostar comes ahead of Thomas Cook’s annual results today.

The results had to be delayed after the 170-year-old firm last month came close to breaching its banking covenants and had to negotiate an emergency £200m credit facility with a group of 17 lenders. It had already signalled earlier this year that it would offload £200m worth of assets but the company is today expected to outline the results of a review by Ernst & Young, which is likely to include the closure of around 200 travel agencies and the loss of as many as 1,000 jobs.

New chairman Frank Meysman, a former Sarah Lee executive, has also been under pressure to review the board. A particular spotlight was thrown on finance director Paul Hollingworth, who agreed a £100m short-term loan in October only to return to the negotiating table a few weeks later.

Thomas Cook will receive cash proceeds of €72.2m from the HCV sale, while Iberostar is also taking on €22.4m of debt. This will mean Thomas Cook’s net debt is reduced by around £81m at current exchange rates.