The sale of USIT World holiday group to its Swiss-controlled competitor, STA Travel is believed to be imminent.

Negotiations were thought to be near conclusion after the Irish student travel group sought "additional financial assistance" to reverse a trading crisis which followed its acquisition of a US company, Council Travel, 10 days before the attacks on the US on September 11th. A trading slump after the attacks prompted losses at Council that threatened the viability of the entire USIT group, which is believed to have a deficit of up to €12 million (£9.45 million).

It is not yet known what impact any sale would have on staffing levels at the Irish company. Neither is the USIT's sale value known. The company was worth more than €120 million in 2000, although its difficulties since then will have diminished that figure. USIT's large creditors are known to include Aer Lingus, which is believed to be owed more than €1 million. Any default of that debt would worsen the precarious financial situation at the State-owned airline.

USIT's banks - including National Irish Bank and Bank of Ireland - initiated the sale process after they appointed accountants KPMG to examine its books. An Ulster Bank spokesman said it was not involved in the KPMG appointment.

Set up in 1959 as a campus holiday agency part-owned by the Union of Students in Ireland, USIT is second only to STA in the global student tourism business. Following the acquisition of student union shares in 2000, USIT's chairman, Mr Gordian Colliery held about 27 per cent of the company. Another 45 per cent was owned by a trust, Krameria. USIT's spokesman would say only that the situation referred to in a statement last Thursday had not changed. That statement to The Irish Times said advanced negotiations on a sale were likely to conclude imminently.

It was since confirmed that USIT had entered talks with STA Travel, the former Student Travel Australia which is controlled by a privately owned trading company based in Zurich, Diethelm Keller.

With revenues last year of €2.9 billion, 2,000 staff and 300 offices in 70 countries, STA is keen to grow. USIT is seen as a strong attraction to STA and both had a similar "youth-oriented" culture. USIT's annual revenues are thought to be worth about €317 million.

STA did not respond to queries to its headquarters in London yesterday. Like USIT, it was established as a student holiday company on university campuses.