25 November 1998

Airtours seeks 250m from bond issue

By Alistair Osborne

Airtours yesterday launched a 250m convertible bond and vowed to play the leading role in the consolidation of the European and North American travel industries.

Harry Coe, managing director, said: "We feel very strongly that the consolidation which has recently occurred in Britain will take place in other markets and we want to be in a position to capitalise on that." Mr Coe refused to comment on speculation that Airtours is in talks with France's largest tour operator, Nouvelles Frontieres, except to say: "There is no single deal for which we are raising the money."

The bond, which is being marketed by Merrill Lynch, could be increased to 300m if there is enough appetite among investors. It will be issued next month and pay interest of between 5.25pc and 5.75pc. It is redeemable in January 2004, when it converts into ordinary shares at a 20-25pc premium over Airtours' share price on the date the bond was issued. Airtours can convert the bonds earlier at a 30pc premium.

The bond was announced alongside a 17pc rise in pre-tax profits to 140.3m for the year to September 30, during which the company spent 211m on six acquisitions. Airtours revealed that pre-tax profits in Scandinavia plunged from 39.2m to 17.5m after it made the mistake of increasing its holidays to compensate for the collapse of competitor Express Resor.

David Crossland, chairman, said that Airtours had cut capacity in Scandinavia to 1997 levels and was also reducing holiday capacity in Britain next year by 5pc. The shares fell 25 to 410p.

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