Thomas Cook sells hotel to ease debt burden

Thomas Cook Group Plc, Europe’s second-largest tour operator, agreed to sell its interest in Hoteles y Clubs de Vacaciones SA to Grupo Iberostar’s hotel unit as part of a plan to trim debt by selling assets.

Thomas Cook will get euro 72.2 million ($95 million) in cash from the sale to Iberostar Hoteles y Apartamentos S L, the company said on Tuesday in a statement. HCV is being sold with net debt of euro 22.4 million and the disposal will cut Thomas Cook’s borrowings by euro 94.6 million, it said. The stock gained as much as 6.7 per cent in London.

“I am delighted that we have been able to agree this transaction which will significantly reduce Thomas Cook’s net debt and demonstrate our ongoing commitment to strengthen the balance sheet,” chief executive officer Sam Weihagen said in the release.

Thomas Cook rose 4.8 per cent to 16 pence at 8:11 am in London. The company will “continue to benefit from access to HCV’s hotel portfolio through a separate commercial arrangement,” according to the statement.

Thomas Cook, the 170-year-old company based in London, has plunged 92 per cent this year after a squeeze on consumer spending in the UK and political unrest in North Africa reduced holiday bookings. A group of banks agreed to provide a £200-million ($312 million) loan to the tour operator, the company said November 25, giving it time to reorganise its business. Thomas Cook may generate as much as £200 million from selling assets, it said in August.

The company, which delayed its full-year results, will report earnings tomorrow. So-called headline operating profit for the year ended September 30 is expected to be “broadly in line” with previous guidance of about £320 million, Thomas Cook said November 22.