The largest chunk of the company’s business comes from the UK, Ireland, India and West Asia.
UK-based travel and leisure specialist, Thomas Cook Group, was on Monday handed a £200-million credit by a consortium of banks led by Barclays, that would help the group tide over its debt crisis, currently estimated to be in the region of £1 billion.
Thomas Cook on Monday said the fresh line of credit “provides the group with much increased headroom to deal with unexpected events and the effects of an uncertain economic environment”.The group’s banks, led by Barclays, HSBC, RBS and UniCredit, have agreed to provide a new £200-million facility available until April 30, 2013, which replaces the £100-million short-term facility announced on October 21. In addition, the banks have agreed a further relaxation of the financial covenants under the existing facilities. Last week, the group said the board was taking steps to reduce its debt and reach a more appropriate capital structure over time. The group would also undertake a strategic review, which may possibly include selling some parts of its business. No firm decision has been taken regarding this.
Apart from its core business of travel and leisure, the group also has presence in travel credit and insurance.
Sam Weihagen, group chief executive, Thomas Cook Group Plc, said, "For over 170 years, Thomas Cook has provided customers across the world with fantastic travel experiences. Today, they can look forward confidently to holidays with us for many years to come."
The new £200-million revolving credit facility, recognises the group's seasonal working capital patterns. The facility has the benefit of a limited security package over shares. It will be available to the group until April 30, 2013. The initial interest margin over Libor payable on the new facility would be five per cent per annum, increasing by 0.5 per cent per annum each quarter. In addition, a commitment fee and, in certain circumstances, a utilisation fee is payable.
The arrangement and participation fees with respect to the new arrangements will cost £10 million.
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The existing credit facilities comprise a £150-million amortising term loan and a £850- million revolving credit facility which mature in May 2014. The interest margin on these facilities remains unchanged.
In addition to the existing term and revolving facilities, the group has £200 million of committed bilateral bonding and guarantee facilities provided by seven banks that are covered by the new amended agreement, which is unsecured and principally for consumer protection.
The company’s current strained finances, it said, was partly due to the winter season, the weakest time of the year for travel business. The Arab spring and euro zone crisis had further hit its business as consumers travelling to these regions have postponed their plans.
The largest chunk of the company’s business comes from the UK, Ireland, India and West Asia, that account for 35 per cent of its £9-billion annual revenues.