Thomas Cook Group has stated that it has reached agreement with its banking group to provide it with a new facility that significantly improves the “robustness” of the group’s financial position.

The group’s banks, led by Barclays, HSBC, RBS and UniCredit, have agreed to provide a new £200m facility available until 30 April 2013, which replaces the £100m short-term facility finalised last month. In addition, they have agreed a further relaxation of the financial covenants under the existing facilities.

For its part, the Board is taking steps to reduce the group’s debt and reach a more appropriate capital structure over time.

The new £200m revolving credit facility recognises the group’s seasonal working capital patterns.

The group also shared details:

The facility has the benefit of a limited security package over shares. It will be available to the Group until 30 April 2013. The initial interest margin over LIBOR payable on the new facility will be 5 percent per annum, increasing by 0.50 percent per annum each quarter. In addition, a commitment fee and, in certain circumstances, a utilisation fee is payable. The existing credit facilities comprise a £150m amortising term loan and a £850m revolving credit facility which mature in May 2014. The interest margin on these facilities remains unchanged.

The banks will be issued warrants to subscribe 42,914,640 new ordinary shares of the company (representing 4.9 percent of the issued share capital of the company) exercisable at a strike equal to the average closing price for Friday 25 November 2011 and Monday 28 November 2011, at any time until 22 May 2015.

In addition, the covenant levels on the existing and new facilities have been further relaxed as follows:

· Leverage covenant: the ratio of consolidated adjusted net debt to leverage EBITDAR must be less than or equal to 5.0x for the testing period ending in December 2011, 4.75x for the testing period ending in March 2012 and 4.5x in respect of all subsequent testing periods

· Fixed charge cover covenant: the ratio of fixed charges to fixed charge EBITDAR must be greater than 1.5x.

The arrangement and participation fees with respect to the new arrangements will cost circa £10m.

In addition to the existing term and revolving facilities, the Group has £200m of committed bilateral bonding and guarantee facilities provided by seven banks that are covered by the new amended agreement, which is unsecured and principally for consumer protection.