The prospect of a refinancing deal between lenders and ailing Thomas Cook caused a sharp jump in shares of the tour operator today.
The 170-year-old company said yesterday it was in “advanced discussions” with lenders, including Royal Bank of Scotland and Barclays, over a package expected to extend the maturity of its bank loans to 2015.
It will provide the firm with stability following a period of crisis last year when it suffered three profit warnings, the departure of its chief executive and was forced to take an emergency £200m (€240m) loan.
Thomas Cook shares tumbled below 10p at the end of last year but rose 15% to 23.6p today following confirmation of talks over its £1.2bn debts.
The deal is expected to come at price as the banking syndicate is expected to demand higher interest charges, more one-off fees and a 5% share stake.
The group is also exploring the sale and leaseback of aircraft as part of a programme that could also see it offload Thomas Cook India.
Simon French, of Panmure Gordon stockbrokers, remains unconvinced and has kept his sell rating on the stock, as well as a 10p target price.
He added: “The key issue is that even after these steps the group has too much debt and too little operating cashflow.”
Talks involving the banks and interim chief executive Sam Weihagen are likely to be completed in the coming weeks, with a strategic review due to be announced by the time of its interim results before the end of May.