THE MYTRAVEL Group has reached a deal in principle with its bondholders
to refinance £221.6 million of convertible bonds, but has downgraded forecasts
for this summer.

The deal has to be put formally to bondholders for approval at a meeting
scheduled to take place in the new few weeks, followed by agreement from the
banks.

The deal extends the maturity of the bonds by three years to January
2007, gives bondholders a 26% stake in the existing share capital, increases
the rate of interest on the bonds from 5.75% per year to 7% and introduces a
success fee based on the percentage increase in the company’s market
capitalisation.

The company remains confident the deal will be in place by the September
30 deadline.

Meanwhile, MyTravel’s prediction it would perform better this summer
than last year has been revised. It now believes operating profit for the
second half of its financial year – covering the peak summer period – will be
level with last year.

The company said margins for
this summer had not improved as much as had been expected. This was blamed on
the pricing of brochures last year, with prices lower than they should have
been, cost controls in the UK airline and difficult market conditions in
Scandinavia and North America.