Saga, the over-50s travel and insurance specialist, is in talks about a £170m debt package as it seeks to chart a course through the remainder of the coronavirus pandemic.

Sky News has learnt that the company, which rebuffed a takeover approach last year, has kicked off talks with a group of debt funds about refinancing part of its existing borrowings.

City sources said this weekend that Saga was considering trying to secure the new debt against its insurance arm – the stronger of its two businesses after a year in which its cruise operations have been largely dormant.

The talks with existing prospective lenders are some way from being concluded, according to insiders, and may not result in a deal.

Saga indicated in a trading update last month that it was taking additional steps to shore up its finances because of uncertainty over the timetable for resuming its travel operations.

“Whilst the group has significant liquidity and headroom to the current covenants in short term bank facilities, given the backdrop of continued disruption to the travel business, we are taking actions to further enhance financial flexibility.

“We have commenced constructive discussions with lenders, who remain supportive.

“We are reviewing the covenants attached to our term loan and RCF, to increase flexibility ahead of the resumption of travel.”

The faster-than-expected pace of the UK government’s COVID-19 vaccination programme has fuelled hopes that restrictions on the travel and hospitality sectors will be lifted well before the summer.

Boris Johnson is due to set out a more detailed “roadmap” in a statement on Monday.

Saga said recently that cruise customers would have to be vaccinated before being allowed to embark, making it one of the first major British companies to make such a stipulation.

Its talks with debt providers come nearly six months after it raised about £150m from shareholders to help fund its recovery.

As part of that deal, Saga’s former chief executive, Sir Roger de Haan, took a big stake in the company and returned to its boardroom as chairman.

Sir Roger sold Saga for £1.3bn in 2004, leaving the company saddled with a big debt-pile under its private equity backers.

Saga’s shares continue to trade at a big discount to the valuation implied by a proposal from two US-based buyout firms last summer.

Mark Wilson, the former Aviva chief executive, was lined up to spearhead the deal and install himself in a top role.

The company is now run by Euan Sutherland, the former chief executive of Superdry and – briefly – the Co-operative Group.
In 2019, Saga disclosed that Elliott Advisers, the activist hedge fund manager, had taken a 5pc stake, prompting expectations of a break-up or other corporate activity.

The company said last month that it had made significant progress against a series of new corporate objectives.

Saga declined to comment on Sunday.

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