Debt-Laden Thomas Cook Close to Signing £1.2 Billion Bank Deal

Britain's well-known and debt-laden tour operator Thomas Cook, which has over 23.6 million customers in 22 nations, is on the verge of signing a £1.2 billion deal with its banks after a 12- month struggle which saw shares falling around 88 per cent.

The company, which saw three profits warnings last year, said that the company was in advanced talks with its banking group to secure the future of the company. The agreement talks come just months after the company's last refinancing deal in Nov 2011 which secured an extra £200 million.

Last year, shares of the company fell drastically as recession hit its main demand, short-haul holidays for middle-class British families.

In 2011, the company made a £151.7 million loss in the three months to Dec 31 compared to a £99.3 million loss during the same period in 2010.

"Thomas Cook confirms that it is in advanced discussions with its banking group about extending its financing arrangements," a statement by the company says. "In addition to the revised financing arrangements, the previously announced asset disposal programme and the sale of Thomas Cook India, the group is exploring a possible sale and leaseback of certain aircraft," the statement added.

Listed among its 17 lenders are banks like the Royal Bank of Scotland and Barclays. The deal would facilitate the extension of the repayment of its loans by two years until 2015.

The Telegraph reported that Thomas Cook will give away 5 per cent of the company's shares to the banking consortium and pay a one-off fee in exchange for a two-year extension on its loans to 2015. The group is also exploring a possible sale and leaseback of up to 20 per cent of its aircraft fleet, as part of the deal, which could take place in the next few months and generate about £100 million. The group owns 91 planes at present.

Although the new deal will act as a surviving lifeline for the company, many other problems will still remain. Apart from this, the company is looking for a new chief executive and recently announced a 2 per cent fall in summer bookings in Britain, although a new advertising campaign has lifted the performance in recent weeks, the Financial Times reports.