Thomas Cook has agreed to push back the expiry date for its banking arrangements by a year to may 2014. The facilities comprise a £200 million term loan and an £850 million revolving credit facility.
In addition, the interest margin on the facilities has been reduced with immediate effect, the company announced this morning.
Chief financial officer Paul Hollingworth said: "As stated in our recent trading update, we continue to perform well on cash flow, with circa £900 million of available cash and committed facilities.
"We are focussed on reducing our debt and strengthening our balance sheet and we have a number of initiatives underway to deliver progress on this including the disposal of certain hotel and surplus assets."
Meanwhile, Thomas Cook is preparing a sale of assets worth more than £200 million as it enters the most important week since its launch as a listed company in 2007.
A Cook spokeswoman confirmed the sales would go ahead in the next six to 18 months. Shares in Thomas Cook lost 44% of their value last week following a profits warning and began trading this morning just above 70p – almost £2 below their value 15 months ago.
A continuing fall is expected to trigger a private-equity bid for the company, with the group’s market capitalisation now at £624 million. Thomas Cook executives will hope the share price steadies as they prepare the asset sale and complete a “fundamental review” of the UK operation. The results of the review will be announced on August 11.
A spokeswoman said the sale would include several hotels and the group’s stake in UK air traffic control service NATs. She declined to give more details, but said any sale of the group’s foreign exchange business in India would be separate and could be expected to raise more money.
The Sunday Times reported the group would announce improvements to the terms of its banking arrangements this week.
Thomas Cook will also hope for good news from the Competition Commission on its proposed merger with The Co-operative Travel and Midlands Co-operative, which would form a chain of 1,200-plus shops.
The Commission is expected to publish the initial findings of its inquiry into the merger within days, although the deadline is still some weeks away.
Travel Weekly understands a Competition Commission requirement to dispose of a substantial number of shops could scupper the deal. The group’s share price fell a little further on Friday, finishing 1.19% lower on the day – more than one percentage point lower than the FTSE 250 index as a whole.
However, the big falls last week came on Tuesday (-28%) and Thursday (-16%), the latter following a Morgan Stanley note warning things “could get worse”.
Shares in rival Tui Travel also fell on Friday by 1.66%, taking its decline for the week above 17%, as both companies suffer from City nervousness about the state of the travel sector and the squeeze on UK consumer spending.
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