Struggling travel firm Thomas Cook Group PLC (LON:TCG) has confirmed talks are underway with its lenders amid reports it is looking to secure £400mln to help shore up its balance sheet.
A Sky News article on Friday afternoon suggested the company, which recently put itself up for sale, is in “advanced negotiations” with its syndicate of banks over the potential funding.
READ: Thomas Cook shines as firm considers possible sale
City editor Mark Kleinman speculated that a statement confirming Thomas Cook has secured the new borrowing headroom could come alongside its half-year results later this month.
Responding to the article, Thomas Cook said it had taken the “proactive step” of entering into discussions with its lenders now ahead of the winter months, when cash reserves are at their lowest.
“We have taken a number of prudent early steps to de-risk our business by taking out capacity in a challenging consumer environment,” said chief executive Peter Frankhauser.
“We have also taken the proactive step to approach our financing partners and are engaged in constructive discussions to ensure we have the flexibility and resources to continue investing behind our plans over the long-term.”
Difficult time for travel groups
It has been a turbulent few years for Thomas Cook, and the travel sector in general. Intense competition has kept prices low while costs have increased, forcing several firms out of business.
Brexit and more general economic uncertainty have also dampened demand for airfares.
Thomas Cook has responded by shutting 21 high street stores and putting its airline business up for sale, although reports have suggested some parties are interested in taking out the whole company given its historically-low equity value of £350mln.
Bosses have also moved to cut the number of flights, taking capacity out of the market.
Thomas Cook shares were down 1% to 21.9p on Friday afternoon. This time last year they were changing hands for almost 150p.