TUI post a loss of €2 billion in the nine months to June 2020 and has agreed with KfW to extend an existing credit line by €1.05 billion. This is subject to TUI issuing a €150 million convertible bond to Germany's 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 September 30
“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,” Tui said in a statement announcing the package.
The additional liquidity agreed with KFW means that TUI now has cash and credit facilities of €2.4 billion.
TUI chief executive Fritz Joussen said, "Like the first KfW loan of €1.8 billion, which was granted in April, the second KfW loan is topping up the existing bank credit facility. The necessary changes have already almost been implemented with the RCF bank consortium”.
The potential convertible bond has an initial term of six years and would be acquired by the WSF after the conclusion of a takeover agreement and pays an interest rate of 9.5%. TUI has a right of redemption as soon as the loan of €1.05 billion 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 9%.
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.