TUI AG ("TUI” or the “Company", and, together with its consolidated subsidiaries, the “Group”)
Prior to entering its close period ahead of reporting its full year results for the twelve months ending 30 September 2021 in December, TUI Group announces the following update.
The Executive Board of TUI resolved today, with the consent of the Supervisory Board of the Company, to launch a fully underwritten capital increase with subscription rights (the “Subscription Rights) to raise gross proceeds of c.€1.1bn (the “Rights Issue” or the “Offering”).
523,520,778 new ordinary registered shares with no par value of the Company (the “New Shares”) will be offered at a subscription ratio of 10:21 (10 New Shares for every 21 existing shares). The Subscription Price of €2.15 per New Share represents a discount to TERP (theoretical ex-rights price) of 35.1%.
TUI’s largest shareholder, Unifirm Limited (“Unifirm”), with a 32.0% holding in the Company, has undertaken to exercise all Subscription Rights attributable to its shareholding at the Subscription Price and to subscribe directly for these New Shares (the "Unifirm Commitment").
Unifirm has also undertaken not to dispose, sell or transfer (i) any of its existing shares or (ii) any of its Subscription Rights or any New Shares acquired pursuant to the Unifirm Commitment until the final settlement of the Offering or 16 November 2021, whichever is the latest.
The Company intends to use the net proceeds of the Offering to reduce interest costs and net debt by reducing current drawings
As a result, taking into account the expected net proceeds of the Offering of around €1,099.5 million, the current drawings under the KfW Facility would be reduced by €375.0 million to zero and the current drawings under the Cash Facility would be reduced by the remaining net proceeds of €724.5 million to €762.0 million.
Overall Summer 21 programme4 now totals 5.2m bookings, an increase of c.1.1m bookings since our August update. As anticipated, we have seen strong improving trends over recent weeks with bookings in Germany and the Netherlands in particular, well ahead of Summer 2019 levels. This reflects the higher level of confidence in departure in our Continental European markets with load factor improvement in the last two to three weeks before departure evident of the short-term booking trend and pent-up demand for our holidays. Over 2.6m customers departed for their TUI holidays during July and August, doubling the 1.3m customers who travelled in July and August last year.
For peak summer period to date (July to October), we have so far operated a capacity of 42% for July and 48% for August. In contrast to our Continental European markets, UK departures have remained largely subdued since our last update, with a nearly unchanged traffic light system limiting the return of popular destinations such as Turkey, Egypt and the Dominican Republic. As a result, we now expect to operate a capacity for peak summer period (July to October) of between c.50% and c.60%. Peak summer period bookings4 (July to October) are currently 49% of 2019 levels with ASP up 2% (overall Summer 2021 bookings4 are down 63% with ASP up 5% versus Summer 19).
The recent announcement on 17 September 2021 by the UK government to adopt a similar travel framework as our European markets is a clear step to further reopening international travel for our UK customers. With a very notable pick-up in UK bookings over the most recent weeks since the announcement, particularly for our Winter 2021/22 programme where we have seen UK daily bookings trending strongly, we are confident this will enable a stronger return for the UK market in the coming months.
For the overall Winter 2021/22 programme4, bookings at this stage are 54% of Winter 2018/19 levels and ASP is up +14%. With travel restrictions now largely lifted for short and medium-haul winter destinations in our key markets, and supported by the increasing vaccination rates of the EU and UK adult population, (the EU has reached its target to fully vaccinate 70% of its adult population by end of August 2021 and the UK has fully vaccinated 83% of its population aged over 16 as of 28 September 2021), we expect a wider return to international travel this Winter 2021/22. Subsequently we expect capacity will be significantly better than the previous Winter 2020/21 season and we would at this stage plan to operate between c.60% to c.80% of a normalised programme, with long-haul destinations expected to recover more slowly. In general, our integrated model and own long-haul fleet means we are agile enough to flexibly adjust plans in the short-term, to both meet demand and to ensure a range of attractive winter destinations are available for our customers. Canaries, Mainland Spain, Egypt and Cape Verde are likely to form the bulk of our holiday offer this upcoming winter and we will aim to drive high load factors on these popular routes.
For Summer 2022, we have a very encouraging pipeline of 1.6m bookings4, which is an increase of c.326k bookings since our Q3 update, driven by a mix of rebookings and new bookings, reaffirming the strong intention to travel and appetite for TUI holidays. Overall Summer 2022 bookings4 are up 54% and ASP is up 15% versus Summer 2019. We believe many customers will continue to want to secure their summer holidays in advance, with Turkey, Florida, Greece, and Cyprus the most popular destinations at present. With the strong indications of pent-up demand, we believe Summer 2022 volumes will likely recover close to normalised levels of Summer 2019
In Hotels & Resorts, as of the end of September, 335 hotels were in operation, (c.93% of own group portfolio) up from 283 at the end of June, across destinations such as Spain, Greece, Turkey, and Mexico, delivering good occupancies and average rates in the current trading environment, benefitting from our integrated model and diversified markets. During the most recent weeks, bookings at many of our re-opened hotels have returned to pre-pandemic levels.
TUI Cruises and Hapag-Lloyd Cruises are currently operating 11 ships out of their 12-ship fleet, offering itineraries across Northern Europe and the Mediterranean, with the brand new expedition class Hanseatic spirit launched on 26 August 2021. We see a clear short-term booking trend for 2021 and booking levels for 2022 and 2023 are currently within historical ranges and at slightly higher rates.
Marella Cruises is currently operating 3 ships out of its 4 ships fleet, offering a combination of domestic UK sailings since end of June and itineraries to the Mediterranean since the start of September. We see continued good demand of winter long-haul itineraries, in particular to Barbados. Early sales for Summer 2022 are well positioned, supported by both rebookings and new bookings.
In TUI Musement, our excursions, tours and activities materially recommenced from mid-June, in line with the restart of operations and capacity level operated by our Markets & Airlines segment. Year to date5, we have already sold c.1.6m excursions, tours and activities.
Liquidity position
As of 4 October 2021, the Group’s total cash and available facilities amounts to €3.4bn, ahead of our 9 August position due to the nature of short-term bookings and resulting improvement in working capital. Overall recent cash development has been clearly positive, better than our previously communicated Q4 assumptions “of towards net cash neutral”. As a result of the application of the net proceeds from the capital increase, cash and available will increase by c.€1.1bn to €4.5bn, following the completion of the Offering. Drawings under our c.€3.0bn KfW RCF facilities have reduced to €375m as at 4 October 2021.
All capitalised terms used but not otherwise defined in this announcement have the meaning set out in the Prospectuses.
Unifirm has undertaken to exercise all Subscription Rights attributable to its shareholding at the Subscription Price and to subscribe directly for these New Shares. The remainder of the capital increase is fully underwritten with Barclays Bank Ireland PLC, BofA Securities Europe S.A. Citigroup Global Markets Europe AG, Deutsche Bank Aktiengesellschaft and HSBC acting as Joint Global Coordinators and Joint Bookrunners and COMMERZBANK Aktiengesellschaft, Landesbank Baden-Württemberg and Natixis acting as Joint Bookrunners. Barclays Bank PLC and Merrill Lynch International are acting as joint sponsors to the Company.
The New Shares:
The subscription rights to the New Shares (the “Subscription Rights”) may be traded on the HSE and the FSE and the DI Pre-Emptive Rights may be traded on a multilateral trading facility of the London Stock Exchange at the times indicated in the timetable below.
The Subscription Rights (ISIN DE000TUAG1D6) of the existing shareholders other than Unifirm and attributable to the existing shares of the Company (ISIN DE000TUAG000 / WKN TUAG00 and Temporary ISIN DE000TUAG323 / WKN TUAG32) will automatically be delivered by Clearstream Banking Aktiengesellschaft, Mergenthalerallee 61, 65760 Eschborn, Germany, to the custodian banks on 12 October 2021 as per the holding on 11 October 2021 at 11:59 p.m. CEST (the record date). The custodian banks are responsible for booking the Subscription Rights to the eligible custodian accounts of such existing shareholders.
Investors holding depositary interests over the Company’s shares (“DIs”) on 11 October 2021 will be credited with pre-emptive subscription rights (“DI Pre-Emptive Rights”) that will allow them to acquire additional DIs representing New Shares at the Subscription Ratio and at the Subscription Price. Investors may exercise their DI Pre-Emptive Rights from and including 12 October 2021 (after being credited with them) up to 10:00 (BST) on 26 October 2021 (the “DI Pre-Emptive Rights Subscription Period”). The DI Pre-Emptive Rights will expire at the end of the DI Pre-Emptive Rights Subscription Period.
Unexercised Subscription Rights or DI Pre-Emptive Rights will lapse and will not automatically be sold. The New Shares to which those unexercised Subscription Rights or DI Pre-Emptive Rights relate may be sold in the Rump Placement. Therefore, shareholders or investors who take no action will not receive any compensation for any unexercised Subscription Rights or DI Pre-Emptive Rights and will be diluted.
Applications will be made for the New Shares to be admitted to listing and trading on the regulated market segment of the Hanover Stock Exchange (the “HSE”) and to be included and admitted to trading in the Open Market segment of the Frankfurt Stock Exchange (the “FSE”). Applications will also be made to the UK Financial Conduct Authority (the “FCA”) for the New Shares to be admitted to the premium listing segment of the Official List of the FCA and to the London Stock Exchange for the New Shares to be admitted to trading on its Main Market for listed securities (the “UK Admission”).
Expected timetable of principal events in Germany and in the United Kingdom:
6 October 2021
Approval of the German Prospectus by BaFin and approval of the UK Prospectus by the FCA
6 October 2021
Publication of the German Prospectus and the UK Prospectus
7 October 2021
International transfers of shares in the Company between the CREST system in the UK and the Clearstream system in Germany paused from close of business
7 October 2021
Subscription Offer published
8 October 2021
Subscription Period begins; Subscription Rights trading on HSE and FSE begins
11 October 2021
Record date for Subscription Rights entitlements
12 October 2021
DI Pre-Emptive Rights Subscription Period begins; DI Pre-Emptive Rights begin trading on a multilateral trading facility of the London Stock Exchange
International transfers of shares in the Company between the CREST system in the UK and the Clearstream system in Germany resume from open of business
21 October 2021
Subscription Rights and DI Pre-Emptive Rights cease trading
26 October 2021
Subscription Period and DI Pre-Emptive Rights Subscription Period end
27 October 2021
Rump Placement, if any
2 November 2021
Commencement of trading in the New Shares
Settlement of New Shares with shareholders and investors
Please refer to the Prospectuses for other dates relevant to the Offering.
Nicola Gehrt, Director, Head of Group Investor Relations
Tel: +49 (0)511 566 1435
Hazel Chung, Senior Investor Relations Manager
Tel: +44 (0)1293 645 823
Ina Klose, Senior Investor Relations Manager
Tel: +49 (0)511 566 1318
Kuzey Alexander Esener, Head of Media Relations
Tel: + 49 (0)511 566 6024
The Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws. Accordingly, the Securities are being offered and sold by way of private placements (i) in the United States, only to qualified institutional buyers in accordance with Rule 144A under the Securities Act, and (ii) outside the United States, to eligible investors in offshore transactions in accordance with Regulation S under the Securities Act.
This announcement has been issued by and is the sole responsibility of the Company. The information contained in this announcement is for background information purposes only and does not purport to be full or complete. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.
This announcement does not constitute a recommendation concerning any investor's decision or options with respect to the Offering. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each shareholder or prospective investor should consult his, her or its own independent legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.
Each of the Underwriters and Sponsors is acting exclusively for the Company in connection with the Offering and they are acting for no one else. The Underwriters and Sponsors will not regard any other person as their respective clients in relation to the Offering or any other matter in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the Offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.
In connection with the Offering, each of the Underwriters and any of their respective affiliates, may take up a portion of the Securities as a principal position and in that capacity may retain, subscribe for, purchase, sell, offer to sell or otherwise deal for their own accounts in such Securities and other securities of the Company or related investments in connection with the Offering or otherwise. Accordingly, references in this announcement to the Securities being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue, offer, subscription, acquisition, placing or dealing by each of the Underwriters and any of their affiliates in such capacity. In addition, certain of the Underwriters or their affiliates may enter into financing arrangements (including swaps, warrants or contracts for difference) with investors in connection with which such Underwriters (or their affiliates) may from time to time acquire, hold or dispose of Securities. None of the Underwriters or any of their affiliates intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.
No person has been authorised to give any information or to make any representations other than those contained in this announcement and the German Prospectus or UK Prospectus published, or the international offering circular issued, by the Company in connection with the Offering, as the case may be (together with any amendments or supplements thereto) and, if given or made, such information or representations must not be relied on as having been authorised by the Company, the Underwriters, the Sponsors or any of their respective affiliates.
Certain statements included in this announcement are forward-looking. These statements can be identified by the fact that they do not relate only to historical or current facts. By their nature, they involve risk and uncertainties because they relate to events and depend on circumstances that will occur in the future. Actual results could differ materially from those expressed or implied by such forward-looking statements. The potential reasons for such differences include market fluctuations, the development of world market fluctuations, the development of world market commodity prices, the development of exchange rates or fundamental changes in the economic environment. The Company does not intend or assume any obligation to update any forward-looking statement to reflect events or circumstances after the date of this announcement. The potential reasons for such differences include market fluctuations, the development of world market fluctuations, the development of world market commodity prices, the development of exchange rates or fundamental changes in the economic environment. The Company does not intend or assume any obligation to update any forward-looking statement to reflect events or circumstances after the date of this announcement.
Forward-looking statements often use words such as “expects”, “may”, “will”, “could”, “should”, “intends”, “plans”, “predicts”, “envisages” or “anticipates” or other words of similar meaning. They include, without limitation, any and all projections relating to the results of operations and financial conditions of the Company and its subsidiary undertakings from time to time (the ‘Group’), as well as plans and objectives for future operations, expected future revenues, financing plans, expected expenditure and divestments relating to the Group and discussions of the Group’s business plan. All forward-looking statements in this announcement are based upon information known to the Group on the date of this announcement and speak as of the date of this announcement. Other than in accordance with its legal or regulatory obligations, the Group does not undertake to update or revise any forward-looking statement to reflect any changes in events, conditions or circumstances on which any such statement is based.
Actual results may differ from those expressed or implied in the forward-looking statements in this announcement as a result of any number of known and unknown risks, uncertainties and other factors, including, but not limited to, the effects of the COVID-19 pandemic and uncertainties about its impact and duration, many of which are difficult to predict and are generally beyond the control of the Group, and it is not reasonably possible to itemise each item. Accordingly, readers of this announcement are cautioned against relying on forward-looking statements. All forward-looking statements made on or after the date of this announcement and attributable to the Company are expressly qualified in their entirety by the primary risks set out in that section. Many of these risks are, and will be, exacerbated by the COVID-19 pandemic and any further disruption to the travel and leisure industry and economic environment as a result.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Securities. Each distributor is responsible for undertaking its own Target Market Assessment in respect of the Securities and determining appropriate distribution channels.
Mathias Kiep, Group Director Investor Relations,
Controlling & Corporate Finance
Nicola Gehrt, Director, Head of Group Investor Relations
+ 49 (0)511 566 1435
Hazel Chung, Senior Investor Relations Manager
+ 44 (0)1293 645 823
Ina Klose, Senior Investor Relations Manager
+ 49 (0)511 566 1318
Kuzey Alexander Esener, Head of Media Relations
+ 49 (0)511 566 6024