Thomas Cook close to $1.9bn lifeline
London, April 8, 2012
Thomas Cook is close to securing a 1.2 billion pounds ($1.90 billion) lifeline from its lenders to secure the future of the world's oldest travel company which issued three profit warnings last year, the Sunday Times reported.
The newspaper said lenders including the Royal Bank of Scotland and Barclays were close to approving financing; however the deal will come at a punishing price.
The paper said Thomas Cook would agree a deal to extend the maturity on its bank loans to 2015, with new conditions on the loans including higher interest and a one-off fee. The lenders will also have the right to take 5 per cent of the company's shares.
Thomas Cook, which secured a 200 million pounds rescue package from lenders in November, reported uplift in trading in March, due to a new advertising campaign and improvements to its website.
That followed a dire 2011 in which a sales slump culminated in the departure of veteran chief executive Manny Fontenla-Novoa in August and a funding crunch requiring the company to ask its banks for new financing.
The group, founded 170 years ago, has been hit hard by tough trading conditions, especially in Britain where its core customer base of families with young children has been particularly affected by the economic downturn.
Thomas Cook declined to comment on the report. – Reuters