Thomas Cook says refinancing highlights ‘new found confidence’
Thomas Cook has confirmed a £425 million rights issue to help clear its £1.2 billion debt and strengthen its business.
The Group, which is currently cutting 2,500 jobs in the UK, also wants to raise €525 million (£440m) selling bonds, and £691 million pounds in facilities.
Chief Financial Officer Michael Healy said the three-pronged strategy, which will raise a total of £1.6 billion, "highlights a new found confidence in our business".
At a press briefing this morning, Healy was questioned over Thomas Cook’s decision to turn down an offer from former Gold Medal boss Terry Fisher and Holiday Autos founder Clive Jacobs in March 2012 to take a 66% stake in the group for £400 million, a figure similar to the one being raised in the rights issue.
"This is a much more comprehensive refinancing of the business, not just involving getting equity in to the business but also extending maturity of the debt profile and flattening the debt profile," said Healy.
Announcing the group’s half year results today, chief executive Harriet Green said: "Earnings before interest and tax and gross margin are well ahead of last year and our cost out and profit improvement actions are going very well, allowing us to increase our target yet again.
"Our progress transforming the business also enables us to undertake our capital refinancing plan. This will reduce the very significant debt that we inherited, lengthen its repayment profile and consequently help us deliver the full benefits of the strategic plan we set out in March.
"We look forward to continuing the rapid transformation of the Group so that we fulfil the potential of the Thomas Cook brand for our customers, suppliers and employees."
The Group reported underlying earnings before interest and taxes of £58.7 million, compared to a £197.5 million loss for the same period last year.
It has managed to reduced its debt by £175.4 million to £1.2 billion.
UK underlying earnings before interest and taxes improved by £29.5 million
by Bev Fearis
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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