US firm eyes MyTravel cruises

AMERICAN leisure group Carlson Wagonlit has emerged as a front-runner to buy the bulk of the US businesses put up for sale by troubled UK tour operator MyTravel.

MyTravel, formerly known as Airtours, hopes to raise £200m from the sale of its American arm, TSI.

It is selling the US operations piecemeal rather than as a whole. Carlson Wagonlit, which specialises in travel agencies, is believed to be particularly interested in TSI's cruise ship division.

MyTravel reached agreement last week with creditor banks, which it owes £1.3bn, to use any proceeds from asset sales to fund the ongoing business rather than to pay off mountainous debt.

In return, the banks will receive 13.5% of any increase in MyTravel's market capitalisation above £50m by May 2006, when the debt is due to be repaid.

MyTravel was once worth more than £2bn, but a series of accounting scandals, profits warnings and boardroom departures has seen its value collapse to less than £100m.

MyTravel's American operation, which used to be run by current chief executive Peter McHugh, has struggled and analysts reckon it may have to write off £300m on the foray.

Last week, it made an ignominious retreat from Germany, selling tour operator FTi back to its founder and taking an £85m loss on the deal.

MyTravel has hired Banc of America and its own financial adviser, Deutsche Bank, to handle the US sale.

Neither MyTravel nor Carlson would comment.