Thomas Cook confirms plans for £1.6bn refinancing

Thomas Cook confirms plans for £1.6bn refinancing

Thomas Cook Group today confirmed plans to raise £425 million through a placing and rights issue.

The company has also agreed to new £691 million in long-term banking facilities.

A €525 million new bond issue was also announced as Europe’s second largest travel group revealed a narrowing of winter half year pre-tax losses of £390.9 million against £584.1 million for the same period a year earlier.

Chief executive Harriet Green said: “Today we are pleased to report improving financial results and announce important measures to strengthen our balance sheet.

“Earnings before interest and tax and gross margin are well ahead of last year and our cost out and profit improvement actions are going very well, allowing us to increase our target yet again.

“Our progress transforming the business also enables us to undertake our capital refinancing plan. This will reduce the very significant debt that we inherited, lengthen its repayment profile and consequently help us deliver the full benefits of the strategic plan we set out in March.

“We look forward to continuing the rapid transformation of the group so that we fulfil the potential of the Thomas Cook brand for our customers, suppliers and employees.”

Cook chief financial officer Michael Healy said: “I am delighted to be able to announce this fully underwritten and comprehensive £1.6 billion refinancing of the group.

“This successful synchronisation of a new bank facility, new bond issue and new equity issue, which reduces leverage and strengthens our liquidity profile, highlights a new found confidence in our business, not just within the business, but also confidence in the group from our external stakeholders.

“We have significantly strengthened the financial management of the group, with improved controls and reporting systems and substantial improvements in working capital management.

“The measures announced today set us on a firm footing for the future, enabling our continuing transformation of the company and bringing forward the time when we can return to paying sustainable dividends to our shareholders.”

Net debt was reduced to £1.21 billion in the six months to March 31 against £1.39 billion. Cook is cutting 2,500 UK jobs and closing 195 agency branches as part of its turnaround plan.

Current trading is described as “encouraging” with overall mainstream summer bookings ahead of last year against capacity cuts of 7%, including a 4% reduction from the UK. Average selling prices are up by more than 4%.

Around 60% of planned summer capacity is sold, a 2% improvement year on year.

“We anticipate that the current booking position should support prices and margins during the remainder of the season, recognising that the ‘lates’ market last year was particularly strong due to inclement weather throughout much of Europe,” Cook said.

The company added that it was “confident” of a satisfactory result for the full year on the back of improved summer trading, financial performance.

Cook confirmed digital entrepreneur John Straw, who has started a number of digital marketing companies over 16 years, one of which he sold to Microsoft and one ultimately to Google, has taken up a new position as global head of web to help develop the companys ‘high touch high tech’ strategy.

Tomasz Smaczny has joined us as chief technology officer from Cathay Pacific where he was chief information officer to support the acceleration of the company’s IT transformation.

Craig Stoehr, a former corporate Partner of Latham & Watkins, has joined from Eastgate Capital Group Limited as group general counsel to provide legal advice to the executive management team and the board as well as supporting the team in driving the transformation forward.


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