- Firm has to repay German government state aid
- Rights issue to raise €1.8 billion of capital
- Net proceeds will fully cover repayment
Shares in TUI (TUI) fell 7% to £13.18 in mid-morning trading after the FTSE 250 holiday operator said it needed to raise €1.8 billion of capital to repay the German government for the state aid it received at the start of the Covid pandemic.
TUI will offer 328.9 million new shares at a subscription ratio of eight new shares for every three existing shares.
The subscription price of €5.55 per new share represents a discount to the theoretical ex-rights price (or TERP) of approximately 40%.
The company said it plans to repay the €420 million convertible Silent Participation I loan and its outstanding €58.7 million 2020/2026 bonds with warrants, which including accrued interest will cost it around €750 million.
The Anglo-German tour operator said the net proceeds will also be used for the full repayment of its current drawings under the German state-owned investment and development bank facility (KfW), which as of 23 March stood at €440 million.
TUI also said it intended to significantly reduce its credit facility with KfW from €2.1 to €1.1 billion.
BOOKINGS TREND ‘ENCOURAGING’
On a separate note, TUI said that ‘booking momentum’ was ‘encouraging’ following on from their first-quarter results reported on 14 February.
The firm said it had ‘record booking days online in both the UK and Germany’ at the start of the New Year.
it added, volumes in the last four weeks ‘are now above pre-pandemic levels at +5% for Winter 2022/23 and +10% for Summer 2023, with higher prices, underlining the popularity of our product offering and a testament to the importance of travel for our customers.’
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