Thomas Cook is in talks with its lenders to secure debt funding.
The travel giant said it is in discussions with its lending banks about providing the cash ahead of reporting its half-year results on May 16.
The borrowing would come on top of existing facilities of £875m.
City sources told Sky News Cook was trying to secure £400m before its auditor is required to provide a statement as part of the results announcement.
They said the business did not require the new funds to see it through the peak summer holiday season.
In a statement issued on Friday afternoon in response to media speculation about the talks, the company said: “As stated in our first quarter trading announcement of February 7, Thomas Cook kept a healthy level of liquidity headroom through the last winter cash low period, maintaining a minimum liquidity buffer within our targeted range of £150 million to £200 million.
“Since that update, the business has moved into its key summer booking period where the Group’s liquidity position continues to strengthen. Looking ahead to winter 2019/20, we have taken the proactive step of engaging in discussions with our lending banks now to ensure we have both the financial flexibility necessary to maintain an appropriate liquidity buffer through the winter, and also the ability to continue to invest in our strategy of growth.”
Peter Fankhauser, chief executive said: “We have taken a number of prudent early steps to de-risk our business by taking out capacity in a challenging consumer environment. We have also taken the proactive step to approach our financing partners and are engaged in constructive discussions to ensure we have the flexibility and resources to continue investing behind our plans over the long-term.”
The price of its bonds fell sharply on Thursday amid speculation it could not repay its debts. Shares dropped by 15%.
Thomas Cook share price over last 12 month, via Google Finance
The travel group put its airline business up for sale in February following a poor financial performance last year which led the company to issue two profit warnings.
In March Thomas Cook announced it was closing 27 shops and putting 320 staff under consultation.
Reports in April suggested a review of the group’s airline had unlocked interest from possible bidders for part or all of Thomas Cook.
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