London: Thomas Cook Group Plc confirmed on Monday that it is in advanced talks with lenders to extend financing arrangements as part of a strategic review that could also result in the possible sale and leaseback of some aircraft.
The 170-year-old travel group has been forced to consider a raft of fundraising proposals after it issued three profit warnings last year due to young families with children cutting back on holidays.
“Thomas Cook Group confirms that it is in advanced discussions with its banking group about extending its financing arrangements,” the world’s oldest travel company said in a statement. “In addition to the revised financing arrangements, the previously announced asset disposal programme and the sale of Thomas Cook India, the group is exploring the possible sale and leaseback of certain aircraft.”
Thomas Cook endured a dire 2011 during 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.
Having secured a £200 million ($317 million) rescue package from lenders in November, it has now opened new talks to give it more financial headroom, however that could come at a heavy price for the group, which is grappling with £890 million in debt.
A spokeswoman for Royal Bank of Scotland Group Plc said on Sunday that it was part of the lending group working to extend credit for Thomas Cook, after the Sunday Times reported that the group was close to securing a £1.2 billion lifeline from its lenders.
A person at one of the other lenders told Reuters that a restructuring could involve the banks taking an equity stake in the business, as the company and 17 lenders discuss how to give the travel firm more headroom.
Talks are also likely to lead to extensions on the maturities of the loans.
Thomas Cook reported an uplift in business in March, after a new advertising campaign and improvements to its website, a much needed boost for the group that has also been hit by political and social turmoil in popular destinations such as Egypt and Tunisia.
“These discussions are part of the result of the strategic review the group has undertaken since agreeing terms of a new facility in November 2011,” it said on Monday. “The group expects to report in more detail on the results of that review by the time of the interim results.”
Thomas Cook is due to publish half-year results in May.