Thomas Cook shares collapse on bank debt talks

Shares in Thomas Cook collapsed by 62 percent on Tuesday after the British travel firm said it was renegotiating its bank debt, blaming a sharp deterioration in business, and will delay annual results. Thomas Cook's share price slumped as low as 15.6 pence in early morning deals. It later stood at 19.75 pence, down 51.96 percent from Monday's closing level. "Thomas Cook Group plc announces that 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, the company is in discussions with its principal lending banks with regard to its facilities during the seasonal low period of cash in the business," it said in a shock statement. "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." As a result, Thomas Cook added that it would delay its full-year results announcement until discussions have been concluded. The group still expects to report a headline operating profit for its 2010/2011 financial year which ran until the end of September. In August, Thomas Cook's chief executive resigned amid a disastrous year for the business, Europe's second-biggest travel firm. Manny Fontenla-Novoa, who took over four years ago, had presided over three profit warnings in the last year linked to unrest in key holiday destinations Egypt and Tunisia and a poor performance in Thomas Cook's British division.