Thomas Cook shares drop 62pc as it talks with its banks
THOMAS Cook shares tumbled by as much as two thirds in early trading after the struggling European tour operator said it was in talks with its banks following "deteriorated" trading and its cash position weakening further.
The share price slumped to as low as 15.6pc in early morning deals, down from 21.69p, after the British travel firm said it was renegotiating its bank debt. It later stood at 19.75p, down 52pc from Monday's closing level.
Thomas Cook finance director Paul Hollingworth said the group was looking to borrow around £100m to tide it over during December, when trading is traditionally quiet, and give it sufficient headroom to be in no danger of breaching banking covenants. That is in addition to the £100m short-term credit line that Thomas Cook agreed with its banks following talks in October.
"It's a combination of the trading and its impact on our cash position making covenants tighter. The sensible, prudent thing for the company to do is enter into these discussions with the lenders and make sure we get the additional liquidity," Mr Hollingworth told reporters on a conference call.
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.
The violence and turmoil in Egypt has shown no signs of desisting as thousands of activists continue to occupy Tahrir Square in Cairo in protest at the slow pace of political change.