Hanover, 8 March 2011

TUI Ad hoc Announcement: TUI AG sets conditions of its new convertible bond

TUI AG (“TUI”) has extended to its shareholders a subscription offer for convertible bonds due 2016 (the “Bonds”) in an aggregate principal amount of 338,964,059.22 euro, with initially 28,599,735 shares of TUI underlying the Bonds. The subscription ratio is 44 : 1, and the subscription period ends on 21 March 2011 (inclusive).
Subject to the exercise by shareholders of their subscription rights (“claw-back”), the Bonds were offered today by BofA Merrill Lynch, Citigroup Global Markets Limited and UniCredit Bank AG, acting as Joint Bookrunners in this transaction, for purchase to selected institutional investors outside of the United States of America, Canada, Australia, Japan and any other jurisdiction in which offers or sales would be prohibited by applicable law by way of an accelerated bookbuilding.
Following completion of the bookbuilding today, the Management Board, with the consent of the Supervisory Board, determined the final and binding terms and conditions of the Bonds on the basis of the results of the bookbuilding.
The coupon has been set at 2.75 per cent per annum, payable semi-annually in arrears.
Based on the authorisation by the AGM held on 7 May 2008, the conversion price of the Bonds was set at 11.8506 euro, reflecting a premium of 30 per cent above the reference price of 9.1158 euro. The reference price equals the volume-weighted average XETRA price of TUI ordinary shares from the start of trading to the close of trading on 8 March 2011.
Each Bond with a principal amount of 59.26 euro (which is five times the conversion price) may be converted initially into 5 TUI no par-value registered ordinary shares. The Bonds will have a maturity of 5 years. The Bonds will be issued on 24 March 2011 (value date) and will be redeemed at par (100 per cent) at maturity unless previously converted, redeemed or cancelled. The Bonds are callable by the Issuer on or after 14 April 2014 if the price of TUI ordinary shares exceeds 130 per cent of the then applicable conversion price (over a certain period of time).
TUI intends to include the new Bonds (ISIN DE000TUAG158) in the Open Market (Freiverkehr) of the Frankfurt Stock Exchange no later than 31 March 2011. However, the completion of the offering of the Bonds is not conditional upon the Bonds being admitted to trading.

This press release does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for securities.

This release is not an offer of securities for sale in the United States of America. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended.
Any public offering of securities to be made in the United States of America will be made by means of a prospectus that may be obtained from TUI AG and that will contain detailed information about the company and management, as well as financial statements. There will be no public offer of the securities in the United States of America.

Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada or Japan, or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan.

This press release may include projections and other “forward-looking” statements within the meaning of applicable securities laws. Any such projections or statements reflect the current views of TUI AG or its subsidiaries about further events and financial performance. No assurance can be given that such events or performance will occur as projected and actual results may differ materially from these projections.

This press release shall not be considered an “offer of securities to the public” for purposes of German securities law, or give rise to or require a prospectus in an EU member state which has implemented the prospectus directive.

This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as “relevant persons”). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

No action has been taken in any jurisdiction (including the United States) by TUI AG that would result in a public offering of the Bonds or the possession, circulation or distribution of any Offering Memo-randum or any other material relating to TUI AG or the Bonds in any jurisdiction where action for such purpose is required.

In connection with the offering of the Bonds, each of the Joint Bookrunners and any of their respective affiliates acting as an investor for their own account may take up Bonds and in that capacity may retain, purchase or sell for its own account such securities and any securities of TUI or any related investments and may offer or sell such securities or other investments otherwise than in connection with the offering of the Bonds. The Joint Bookrunners do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

Any offer if made may only be addressed to and directed, in member states of the European Economic Area which have implemented the Prospectus Directive (each, a “relevant member state”), at persons who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) and pursuant to the relevant implementing rules and regulations adopted by each relevant member state (“Qualified Investors”).
Each person who initially acquires any securities or to whom any offer of securities may be made will be deemed to have represented, acknowledged and agreed that it is a Qualified Investor as defined above.

In the case of any securities being offered to any investor as a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such investor will also be deemed to have represented and agreed that the securities acquired by it in the offering have not been acquired on behalf of per-sons in the EEA other than Qualified Investors or persons in the UK and other member states (where equivalent legislation exists) for whom the investor has authority to make decisions on a wholly discretionary basis, nor have the securities been acquired with a view to their offer or resale in the EEA where this would result in a requirement for publication by the Issuer, the Joint Bookrunners or any other manager of a prospectus pursuant to Article 3 of the Prospectus Directive, unless the prior consent of the Joint Bookrunners has been obtained to such offer or resale.

The Joint Bookrunners are acting on behalf of the Issuer and no one else in connection with the offering of the Bonds and will not be responsible to any other person for providing the protections afforded to clients of the Joint Bookrunners, or for providing advice in relation to the securities.