Thomas Cook set for boost from emergency loan deal

* Thomas Cook secured new 200 mln stg funding late Friday

* Terms of upcoming covenant tests relaxed

* Thomas Cook shares lost three-quarters of value last Tuesday

* UK sales had slumped amid uncertainty over company’s future

By Matt Scuffham

LONDON, Nov 27 (Reuters) - Shares in Thomas Cook Group Plc will be in focus on Monday after the world’s oldest travel firm secured new funding from its banks, easing fears over its future.

The stock crashed last week, losing three-quarters of its value on Tuesday after the 170-year-old company asked its lenders to come to its rescue for the second time in five weeks.

The shares are down more than 90 percent since the start of the year but are likely to recover some of those losses as investors digest news of the emergency loan.

Thomas Cook said late on Friday its banks, led by Barclays , HSBC, RBS and UniCredit, had agreed to provide a new 200 million pounds ($310 million) facility available until April 2013. It replaces a 100 million pounds short-term facility announced in October.

The company will pay about 6 percent interest on the loan, rising 0.5 percent every quarter. The banks have also agreed to relax the terms of upcoming tests of its financial health.

Thomas Cook, which takes over 22 million people on holiday each year, had issued a string of profit warnings leading to the departure of its chief executive in August.

It has been hit hard by tough trading conditions, especially in Britain, where its core customer base of families with young children has been particularly affected by tough economic conditions. Bookings were also impacted by unrest in popular destinations such as Egypt, Tunisia and Morocco.

Meanwhile, the negative publicity and uncertainty over the company’s future led to a 30 percent slump in sales over the past week.

TUI Travel, which owns the Thomson and First Choice brands, has looked to capitalise on its rival’s misfortune, placing advertisements this week in national newspapers stating: “Another holiday company may be experiencing turbulence, but we’re in really great shape.”

Thomas Cook has embarked on a strategic review as it looks to bring down its 900 million pounds debt. It is looking to raise 200 million pounds through disposals and analysts expect it to close hundreds of shops.

Shares in Thomas Cook closed on Friday at 18.02 pence, valuing the company, which was once in the FTSE-100, at 158 million pounds. ($1 = 0.6458 British pounds) (Reporting by Matt Scuffham; Editing by David Holmes)


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