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Thomas Cook Signs £200m Credit Deal

Thomas Cook LogoThe travel company Thomas Cook has agreed to provide its bankers new access to funding. They company’s shares fell 75% on Tuesday after announcing its discussion to increase borrowings. It said that sales went down due to weak consumer confidence after floods in Thailand and political turmoil in Tunisia and Egypt. The firm’s bankers, including HSBC, RBS, Barclays and UniCredit, have promised to provide a new £200m provision until April 30, 2013.

This agreement will now replace the former £100m short-term credit deal announced last October 2011. CEO Sam Weihagen expressed his delight in reaching an agreement and thanked the banks for their swift action. He promised to strengthen the company’s balance sheet and ensure a stronger financial company.

In September the corporation’s net debt was under £900m. This new loan will bring this figure to over £1 billion. The firm has denied breaching the agreement of any loans, stressing its desire for new loans to increase its resilience in the face of difficult trading conditions.

Mr Weihagen announced his plans to review the entire firm which, although strong in Germany and Scandinavia, had suffered in the United Kingdom. Weihagen said that the firm is working on a turnaround programme which will increase efficiency and profitability. He promised the continuation of High Street shops, saying that there are still many customers who prefer booking in High Street shops. He added that 65% of all bookings during peak seasons are purchased through shops, showing the preference of shops over the Internet.

 

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