HOLIDAYS giant Thomas Cook gave a boost to its flagging share price today by announcing a new short-term loan deal with its banks.
The arrangement will provide Thomas Cook with an extra £100m of headroom for its seasonal cash low point of December and January. It has also amended the terms of existing bank facilities to increase flexibility.
The moves came as a relief to investors after three profits warnings in a year and the departure of its chief executive heaped pressure on the firm.
Shares have slumped 80 per cent in six months but were up by around 20 per cent today as analysts said the deal reduced the need for a cash call to shareholders.
Thomas Cook has already confirmed that it will not pay a dividend to shareholders while it works on bolstering its balance sheet and reducing debts of around £900 million.
As well as confirming the block on dividend payments, the lenders have reversed a previous cut in the margin payable under the loan facilities.
Thomas Cook said the original loan terms were agreed in May 2010 but that factors such as the volcanic ash cloud, unrest in the Middle East and North Africa and under-performance of its UK business had squeezed headroom.
Finance boss Paul Hollingworth said: “We are pleased to have the full support of our banking group in amending the financial covenants so as to provide greater financial flexibility, particularly around the seasonal cash low point at the end of December.”