Thomas Cook in new £200m credit facility
Travel firm Thomas Cook has reached agreement with its bankers to provide it with new access to funding.
Shares in the company fell 75% on Tuesday after it said it was in talks about increasing borrowings.
It said weak consumer confidence due to political unrest in Egypt and Tunisia and floods in Thailand had hit sales.
Its bankers, including Barclays, HSBC, RBS and UniCredit, have agreed to provide a new £200m facility until 30 April 2013.
The new deal replaces the £100m short-term credit agreement announced on 21 October 2011.
"I am absolutely delighted that we have reached agreement and I would like to thank the banks for acting so swiftly," said group chief executive Sam Weihagen.
"We will go on with what we said we were going to do some time ago, we are going to strengthen our balance sheet making sure that we will be a much stronger financial company."'Profitability problems'
At the end of September the firm's net debt was just under £900m. The new loan will take the figure to over £1bn.
The company has stressed that it is not currently in breach of the terms of any of its loans, and said it wanted the new loans to "improve its resilience if trading conditions remain difficult".Continue reading the main story
Mr Weihagen said he would be reviewing the entire business which, while strong in Scandinavia and Germany, had suffered "profitability problems" in the UK.
"We are working on, and actually have really started on a turnaround programme for the UK which will make it a much more efficient and much more profitable company," he said.
He said this wouldn't mean an end to its High Street shops: "We're going to follow the customer journey so as long as there are a lot of customers who like to book in High Street shops we will have a lot of High Street shops.
"Sixty-five per cent of all the bookings that we take in peak seasons are done through shops, so in this country there are still a lot of people who feel more secure making their holiday reservations in shops than on the internet."
The company says it has been hit hard by political unrest and natural disasters. The biggest destination for French travellers in winter is Tunisia, which means that "the French people are simply not travelling".
It has seen bookings fall 20% in France and Belgium compared with last year.
The firm's Russian business has been adversely affected by the floods in Thailand and continuing political unrest in Egypt.
Thomas Cook has said it will issue its preliminary financial results, for the 12 months ending on 30 September 2011, during the week beginning 12 December 2011.
These had been delayed until the loan talks concluded.
The company's board is also taking steps, including a strategic review, to reduce the group's debt "and reach a more appropriate capital structure over time".
Thomas Cook has reassured customers that their bookings are protected.
Anyone booked for a package holiday with Thomas Cook is covered under the Air Travel Organisers' Licensing (Atol) scheme, which is funded by contributions from travel companies.
However, people who have only booked a flight with the company will not be covered by the Atol scheme and are advised to buy suitable travel insurance.