Fears over the future of Thomas Cook have been allayed by a new financing package which the cash-strapped package tour firm has agreed with its lenders.
The new terms of the existing £1.4bn finance facility extend the maturity of Thomas Cook's financing until May 31st, 2015, and have revised financial covenants which give the group greater financial flexibility.
There is no fixed repayment schedule to the loan facility, and the interest margin on its £200m liquidity facility (announced back in November) remains unchanged, but the interest margin over the London Inter-bank offered rate (LIBOR) will increase to 3.50%.
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The banks will be entitled to an amendment fee of 1% and will be granted warrants to subscribe for new ordinary shares (representing around 5% of the issued share capital of Thomas Cook Group) at an exercise price of €0.10 per share. In addition, the warrants issued in December 2011 will be re-priced to the same exercise price.
While the banks have, understandably, extracted their pound of flesh, Thomas Cook said that it will now be entitled to retain the net proceeds from the sale and leaseback of between 17 and 19 aircraft, which will provide significant additional liquidity.
Sam Weihagen, the interim Chief Executive Officer (CEO), said the deal "highlights the confidence our lenders have in Thomas Cook".
Weihagen added that the group continues to make good progress in strengthening its financial position, and its disposal plans, including an aircraft sale and leaseback, are proceeding well.
As well as announcing the new financing package, the group said it has completed its strategic review, though from the details released by the company there is nothing earth-shattering in the group's turnaround plan.
The company intends to continue to implement the make-over of its UK business, and to continue to build on the solid performances of its Northern Europe and German businesses, where the group will be looking to pep up its online offerings and to make further inroads into the cost base.
The under-performing businesses in Canada and Russia have recently had an infusion of new management while new management in France have had their feet under desks since last year. Both Russia and France have been knocked for six by events in the Middle East and North Africa (MENA), meaning management teams in both countries face considerable headwinds.
The group is still looking to raise money from disposals and said it has received a good level of interest in its Indian business, with a number of interested parties now performing due diligence on the Indian operations.
"This bank agreement, together with these actions, places Thomas Cook on a much firmer footing," said Chairman Frank Meysman. "The search for a long-term group CEO is progressing well," he added.
The share price rose 2p to 23p on news of the refinancing.
JH
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