Leisure and travel specialist Thomas Cook's shares tumbled nearly 70 per cent on the London Stock Exchange on Tuesday as it announced it was in talks with banks to increase its borrowings to tide over a challenging financial situation within the group.
The group already has a 900-million pounds debt on its books and is seeking a further £200 million from banks.
Despite the financial strain the company is now facing, Thomas Cook's interim Chief Executive Sam Weihagen insisted that 'business was robust with a great future.'
The company said its current strained finances was partly due to the winter season, which is the weakest time of the year for travel business.
The Arab Spring and euro zone crisis has only further crippled its business as consumers travelling to these regions have postponed their travel plans.
The largest chunk of the company's business comes from the UK, Ireland, India and West Asia that accounts for 35 per cent of its 9-billion pounds annual revenues.
Weihagen said the group was now looking at various parts of its businesses and would consider selling off some of its non-core business if it would help in tiding over the current crisis.
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Apart from its core business of travel and leisure, the company also has its own fleet of aircrafts and is also into travel finance and insurance businesses.
In a brief media statement, Thomas Cook Group Plc said as a result of deterioration of trading in some areas of the business in the current quarter, and of its cash and liquidity position since its year end, it is in discussions with its principal lending banks with regard to its facilities during the seasonal low period of cash in the business.
"While the company currently remains in compliance with its financing covenants, it also intends to seek agreement from its lending banks to adjustments that will improve its resilience if trading conditions remain difficult," it said.
As a result, the company will delay its announcement of its full year results until these discussions are concluded.
The company expects to report a headline operating profit for the year ended September 30, broadly in line with previous guidance, it said.
In 2010, the company had reported total revenue of 8.9 billion pounds, down four per cent over the year before and a profit of 390 million pounds, down by six per cent over 2009.
