Thomas Cook eases debt load with asset sale

Debt-laden Thomas Cook sold a stake in five hotels and a golf club in Spain yesterday as part of its pledge to offload assets worth £200m.

The company, which is due to present delayed annual results today, will continue to access the portfolio of hotels under a commercial agreement with purchaser Iberostar.

The sale price is 72.2 million euros (£61.4m) but with the hotels being sold with net debt of 22.4 million euros (£19m), the deal will reduce Thomas Cook’s borrowings by 94.6 million euros (£80m).

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Chief executive Sam Weihagen said the transaction, which still needs the approval of shareholders, would significantly reduce the company’s net debt and “demonstrate our ongoing commitment to strengthen the balance sheet”.

There were recently fears over the future of the 170-year-old company after it had to ask its banks for an additional £100m lifeline.

The deal with its bankers, just one month after it increased its loans by a similar amount, came as it said its French and Belgium markets saw bookings fall by up to 20 per cent in recent weeks, while a move into the Russian market had “got off to an extremely slow start”.

The group has suffered from the impact of the Arab spring, which has hit bookings to Tunisia and Egypt, destinations popular with France and Russia respectively, as well as UK holidaymakers.

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It is understood the firm could today announce the loss of up to 1,000 jobs by closing 200 of its 1,100 UK travel shops as it slashes costs. Thomas Cook last month launched a publicity drive in a bid to reassure customers that their holidays are still “in safe hands” despite its recent woes.

The firm, which saw its share price slump by 75 per cent in one day last week amid fears of an imminent collapse, published a letter from Mr Weihagen in national newspapers saying it is safe to book breaks with the group.