- Increase of the existing KfW tranche by EUR 1.05 billion and Convertible Bond for EUR 150 million
- Stabilisation package strengthens TUI's position in a volatile market environment over the 2020/21 winter season and in the case of any further long-term travel restrictions and disruptions due to COVID-19
- TUI would thus currently have cash and available facilities of 2.4 billion euros
TUI and KfW have agreed to extend the existing KfW credit line by 1.05 billion euros. The drawing of this amount is subject to TUI issuing a Convertible Bond in the amount of 150 million euros to the Economic Stabilisation Fund (WSF) and a waiver by the bondholders of the Senior Notes due in October 2021. Both conditions as well as other formal requirements need to be fulfilled by 30 September 2020.
The €1.2 billion stabilisation package strengthens the Group's position and would provide sufficient liquidity in this volatile market environment. This will cover both the seasonal swing in tourism through winter 2020/21 and other long-term travel restrictions and disruptions related to COVID-19.
Including the funds from the additional stabilisation package, TUI AG would thus have cash and credit facilities of 2.4 billion euros.
TUI CEO Fritz Joussen: "The additional stabilisation package allows us to focus on the operations and at the same time to drive forward the realignment of the Group. Already before the pandemic, we had initiated the next transformation of TUI: the transformation into a digital platform company. This transformation will now be significantly accelerated. Our integrated business model is intact. Summer holidays are taking place again in all markets. We introduced massive cost reductions early and implemented them quickly and consistently. However, no one knows at present when a vaccine or medication will be available and what effects the pandemic will have in individual markets in the coming months. Therefore, it is right and important to take further precautions together with the German Federal government. Since the lifting of travel restrictions for most European destinations, TUI has benefited from a partial restart of the programme for summer 2020. As customers start their holidays and increasingly book future trips, the Group is generating revenue again. Hotels of the TUI hotel brands also reopened and the first cruises from Germany were launched.
Like the first KfW loan of 1.8 billion euros, which was granted in April, the second KfW loan is topping up the existing bank credit facility ("Revolving Credit Facility", RCF). The necessary changes have already almost been implemented with the RCF bank consortium.
The potential Convertible Bond with an initial term of six years would be acquired by the WSF after the conclusion of a takeover agreement. The bond would bear interest at a rate of 9.5 per cent. TUI has a right of redemption as soon as the loan of 1.05 billion euros has been repaid. TUI would issue the Convertible Bond under exclusion of subscription rights and use an existing capital reserve resolution for this purpose. If fully converted, this would currently represent a share in TUI of up to nine per cent.
The conversion price per share would be fixed at 60 percent of the average stock price prior to the issuance, but would not be below 2.56 euros.
The first KfW loan is subject to conditions, including that TUI may not pay any dividends during the term of the loan and that restrictions apply to share buybacks. The stabilisation measure provides for further restrictions, for example on investments in other companies and on the remuneration of the members of the Executive Board, as long as the WSF remains invested.
The additional KfW loan is also subject to the provison that the holders of the bond maturing in October 2021 waive any future limitation of TUI's indebtedness.oday leading travel companies TUI and Booking.com announced a strategic global experiences, activities and excursions partnership, providing millions of Booking.com customers worldwide with direct access to the rapidly growing activities segment of TUI and its digital subsidiary Musement. The contracts have been signed and the cooperation will start in summer 2020.