Thomas Cook’s £94m India deal eases debts

Holiday firm Thomas Cook sold its Indian subsidiary to a Canadian investment house yesterday, raising £94 million to help pay off its debts.

Fairfax Financial Holdings will buy the British firm’s 77 per cent holding in the business and will retain the right to use the Thomas Cook name for 12½ years.

The sale was expected and followed an auction process but was well received by investors as the price was at the higher end of expectations.

Douglas McNeill, an analyst at Charles Stanley, said the cash would account for about 11 per cent of Thomas Cook’s debt for the loss of just 5.5 per cent of group profits. “It certainly doesn’t solve Thomas Cook’s problems on its own, but – along with other recent disposals – it eases the pressure a little,” he said.

Thomas Cook came close to collapsing under the weight of its debts earlier this year but recently secured a £1.4 billion loan package from its lenders which will tide it over for three years while it raises funds through a series of disposals.

The Indian deal is subject to shareholder approval, but the company warned last week that it faced administration if investors did not back its disposal plans.

It has already sold its Spanish hotels for £57.3m and completed a sale and leaseback deal for 17 aircraft that raised £182.9m.