TUI Group announced a full underwritten capital increase on March 24 aiming to raise €1.8bn. The group aims to use the net proceeds to fully repay its state aid loan.
"The full repayment of the Corona state aid was our declared goal,” says Sebastian Ebel, CEO TUI Group. “With the capital increase now approved, we are taking the final step with the WSF aid and fulfilling our commitment. We will use the proceeds to repay the aid received from the WSF, including interest. TUI thus has a good balance sheet structure again and we are doing everything we can to further improve the Group's profitability. We are reducing interest costs and as a result creating a solid basis for the future. Our goal is clear: we want to grow profitably again and gain more market share with additional customers and new products. The booking trend also continues to be very encouraging."
For the fully underwritten capital increase, 328,910,448 new shares will be offered in a subscription ratio of 8:3 (eight new shares for every three existing shares) and at a subscription price of €5.55. The subscription period for the new shares will start on March 28 and end on April 17, 2023.
The capital increase is underwritten with Barclays, BofA Securities, Citigroup, Commerzbank, Deutsche Bank and UniCredit acting as joint global coordinators. HSBC Trinkaus & Burkhardt and Société Générale are acting as co-joint global coordinators. Crédit Agricole CIB, ING and Natixis are acting as joint bookrunners. Barclays and Merrill Lynch are acting as joint sponsors to TUI.
TUI will use the proceeds to repay in full or buy back at market value the Silent Participation I provided by WSF of a nominal €420 million and the outstanding warrant bond including warrants of around €59 million plus accrued interest. Therefore, WSF will receive a total of around €750 million.
In addition, TUI had drawn parts of the KfW credit line over the winter. With the net proceeds these current drawings under der KfW credit line, amounting to around €440 million euros, will be repaid in full and replaced. With the remaining net proceeds, the current drawings of around €1.438bn under the €1.454bn cash facility will be reduced to around €870 million. TUI also intends to significantly reduce the €2.1bn KfW credit line
TUI noted that shares of Russian national Alexey A. Mordashov – or any connected person or entity – who indirectly holds 30.91 percent in the Group via Unifirm Limited and Severgroup – continued to be locked under sanctions and under German securities law.
Following a successful capital increase and repayment of the state aid, TUI expects its net debt to have improved significantly from €3.4bn at the end of financial year 2022 to €2.4bn. TUI also expects that its gross leverage ratio will return to the pre-crisis level for the financial year 2023 and fall to around 3.0x. In addition, the previous hybrid capital of the federal government will be completely replaced with real equity, TUI said.
Meanwhile, TUI has also finalised a senior secured finance lease for five 737-800s with MUFG.
Olivier Trauchessec, global head of aviation at MUFG, credited the banks dedicated aviation asset management and research teams for differentiating the bank from competitors to be able to “structure a tailor-made financing solution for TUI”.