The recent £100m loan has been withdrawn and has been replaced by a £200m facility offered by a syndicate of 17 banks. The company will thus have the extra working capital that they require in the run-up to the northern hemisphere summer season.

In exchange for  the extra money Thomas Cook gives up much control over their strategy.  The new credit deal is conditional on more incisive disposal of assets and the company must undertake a strategic review.  They further agreed to limits on capital expenditure, an agreement not to buy shares or acquire any further businesses, a prohibition on dividends, and no further share buy-backs are permitted.  (They squandered £290m of cash in 2008 buying their own shares.  By way of comparison, the whole company was valued at under £100m in November 2011, after the shares crashed.)

The banks will receive also an option to purchase 4.9% ownership of the company at current prices, and the fee cost for the new deal is £10m.  They will be paying 5% interest on the new loan, which will increase by half a percent for every quarter that the loan runs.  The facility will run until 30 April 2013, by which time they will be paying as much as 8% on the interest.

The liabilities of Thomas Cook currently include £1.1bn owed to banks, aircraft lease agreements of around £800m and £700m of bonds.

According to Sky News, Thomas Cook abandoned a proposed £400m rights issue that was to have been announced on 24 November, along with their annual results.  The subsequent collapse of their share price in all probability means that this is no longer an option.

The company is trying seemingly desperate measures to keep going.  Including the reduction of its fleet of aircraft by 6 to 35, and it plans to close 200 of its travel agencies.  The company is wanting to raise an additional £200 million from the sale of hotel properties and the company’s share in Britain’s Air Traffic Control.

A results report was due Thursday 24 November but will be delayed until further negotiations with banks, to try obtain another £100 million in credit (to add to their existing revolving credit of £850 million, an amortising loan of £150 million, £200 million of “committed bilateral bonding and guarantee facilities” provided by seven banks, and a further loan of £100 million announced on 21 October 2011).  There are also significant deficits in its pension fund. The announcement that they are seeking a further loan resulted in a single-day loss of 75% of its share price on 22 November.  As a result the market capitalisation of Thomas Cook was down by an astonishing 94% since the beginning of the year.

In the last reported two trading years it has made pre-tax losses of £269 million (to March 2011) and £252 million (to March 2010).

The Guardian newspaper reported on Tuesday that Thomas Cook’s debt obligations could exceed £1.5 billion by the end of the year.

They say they are fine, the flights are  running on time, and no excursions have been cancelled.  However, the fact that investors have been willing to take such large losses in order to pull out what they can from the company is a strong indication that they do not feel confident in the future of Thomas Cook.

To add to their woes, the company reported that bookings in France and Belgium have dropped by 20% in the last few weeks.

Should you book a holiday with them?  That is up to you, but you may have greater peace of mind if you do not – they directly mentioned the possibility of defaulting on their obligations, without stating how that would impact on any of their travellers, should that happen.  It is our guess that a number of people will maybe wait a while, or else use somebody else for now.

Thomas Cook also trades as Cresta, 18-30, Going Places and Sunset. They also took over the Co-operative Travel group in 2011.