Thomas Cook launches £1.6-bn capital refinancing

Troubled British travel firm Thomas Cook on Thursday announced plans to raise £1.6 billion ($2.4 billion, 1.8 billion euros) in a major capital refinancing plan, after more than halving its first-half losses on the back of deep cost-cutting.

Thomas Cook said in a statement that it has agreed a £691-million new banking facilities deal. It will also seek to raise £425 million from shareholders, via a placing and rights issue, and 525 million euros from a new bond issue, under plans that are aimed at slashing debt and strengthening its capital base.

The London-listed firm also revealed that net losses sank to £285.6 million in the six months to March.

That compared with a loss after taxation of £594.3 million in the same part of its previous financial year.

Pre-tax losses were cut to £390.9 million, from £584.1 million last time around. Revenues dipped three percent to £3.22 billion.

“Today we are pleased to report improving financial results and announce important measures to strengthen our balance sheet,” said chief executive Harriet Green in the results statement.

She added: “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.”

Turning to the outlook, Thomas Cook forecast it would deliver a “satisfactory” result for the full year.

“In view of encouraging trading for the summer 2013 season, continued progress with our transformation … and the improved financial performance in the six months, the board is confident of a satisfactory result for the full year,” it said.

Earlier this year, the company announced plans to axe 2,500 jobs in Britain as part of its turnaround efforts, but opted against selling its French division.

Thomas Cook had posted annual net losses of almost £586 million last November, as it was plagued by the combined impact of the eurozone debt crisis, Middle East unrest and high fuel costs.