Thomas Cook edges towards new banking terms
Struggling travel firm Thomas Cook has confirmed it is in talks with its bankers about extending its financing arrangements.
Struggling travel firm Thomas Cook has confirmed it is in talks with its bankers about extending its financing arrangements.
The statement comes after weekend press speculation it would conclude a £1.2bn refinancing deal.
The main problem for Thomas Cook has been a lack of customers taking package holidays to short haul destinations - the mainstay of its business.
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With middle class British customers thin on the ground, the company issued a series of profit warnings through 2011, culminating in a nerve shredding announcement in November that it was in danger of breaching its banking covenants.
At that time the banks came through with £200m in emergency financing, and it now looks like a more permanent facility will be put in place.
The problem for shareholders, who have seen their holdings drop 86% in the last 12 months, is that the banks may demand a stake in Thomas Cook in exchange for the new overdraft.
It's also likely the company will pay higher interest rates than its sector peers as the banks extract a price for their mercy.
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