Mar 24, 2023
Tui to Raise €1.8 Billion to Repay Debt, Strengthen Finances
(Bloomberg) -- TUI AG plans to raise €1.8 billion ($2 billion) in a rights offer to repay pandemic state aid and strengthen its balance sheet.
The package tour operator will offer about 328.9 million new ordinary shares at a subscription ratio of eight new shares for every three existing shares, the company said in a statement Friday. The subscription price of €5.55 per new share represents a discount to the theoretical ex-rights price of about 39.85%, TUI said.
The sale will give the travel company net proceeds of about €1.75 billion, allowing TUI to repay aid that was granted at the height of the pandemic. The company received more than €4 billion in support, of which it had yet to repay about half. Travel around the globe has made a strong comeback, and TUI said the “encouraging” booking momentum reported in the middle of last month has continued.
The stock dropped as much as 8.9%, or €1.42, to €14.58.
TUI’s biggest investor, Unifirm Ltd., is controlled by the family of Russian billionaire Alexey Mordashov, who’s been sanctioned by the European Union and who indirectly holds 30.91% in the company. TUI said that because of his sanctioned status, he cannot participate in the rights issue and no subscription rights will be granted to him.
The company said in December that money raised would be used to pay back a €420 million silent participation and a hybrid debt-equity instrument, and reduce a credit facility with Germany’s state investment bank, steps on which it is now following through.
Bloomberg News reported in January that TUI had picked banks for the offering to help repay the bailout package, citing people familiar. Banks involved in deal include Barclays Plc, Bank of America, Citigroup Inc, Commerzbank AG, Deutsche Bank AG, UniCredit SpA, HSBC Holdings Plc, Société Générale SA, Crédit Agricole SA, ING Groep NV and Natixis SA.
(Updates with stock performance in fourth paragraph.)
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