Bloomberg News

Thomas Cook Gains Most Ever on Revised Banking Arrangement

October 21, 2011

(Updates with loan amendments from sixth paragraph.)

Oct. 21 (Bloomberg) -- Thomas Cook Group Plc, Europe’s second-largest tour operator, rose the most ever in London trading after the company’s banks relaxed loan conditions and agreed to provide additional short-term funds.

The shares gained as much as 24 percent to 56.5 pence, and traded 6.7 percent higher at 52.25 pence at 11:30 a.m. in London, trimming their decline this year to 73 percent.

The new loan arrangements buy time for management to complete a 200 million-pound ($315 million) disposal program and restructure the U.K. tour business, Karl Burns, a London-based analyst at Shore Capital, said in a note.

“Today’s announcement is likely to be taken well, given the main concern surrounding Thomas Cook was the group’s ability to stay within its banking covenants in December 2011 and beyond,” Burns wrote. He has a “hold” rating on the stock.

This year’s political unrest in North Africa and a squeeze on consumer spending in the U.K. have hurt holiday bookings at London-based Thomas Cook. Chief Executive Officer Manny Fontenla-Novoa stepped down in August after the company reduced profit guidance three times in a year.

Revised Covenants

The tour operator’s lenders, led by agent Bayerische Landesbank, accepted amendments to financial covenants on its 850 million-pound revolving credit facility and 150 million- pound term loan, both of which are due to mature in May 2014.

Adjusted net debt must be less than or equal to 4.5 times adjusted earnings before interest, taxes, depreciation, amortization and rent until the end of the year, and fall to 4.25 times leveraged until maturity, according to a statement. The ratio must also be more than or equal to 1.75 times fixed charges.

Additionally, a new 100 million-pound short-term loan facility will provide “headroom around the seasonal cash low- point” at the end of the year, the company said.

--Editors: Cecile Gutscher, Paul Jarvis

To contact the reporters on this story: Armorel Kenna in Milan at akenna@bloomberg.net; Stephen Morris in London at smorris39@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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