Toei: The travel company places 350 million euros in convertible bonds

TUI Group needs more liquid money.

Image Alliance / dpa | Julian Strattenschholt

Travel company Tui places a convertible bond of 350 million euros. With this, the company wants to improve its liquidity position.

Tui has already received government aid in excess of € 1 billion, plus capital and loan increases – totaling € 4.8 billion.

An industry expert described the convertible bond as a short-term procedure. The group funds will remain sufficient for a maximum of 6 months.

Travel company Tui has already received more than 1 billion euros in anti-Coronavirus aid from the federal government through the Economic Stability Fund (WSF). On Friday morning, the group announced its desire to make more money in the capital market.

Accordingly, Tui wants to offer investors € 350m of convertible bonds – with the option to increase the issue size to € 400m. With this, Tui wants to improve its liquidity position in the wake of the ongoing Corona crisis and then pay off the existing financing instruments, i.e. liabilities.

The collapse in travel demand in the Coronavirus pandemic has left Tui plunging into existential difficulties. The state and private investors saved the group with financial injections. Before the additional capital increase of 500 million euros in January 2021, total support from the three bailout packages with loans, guarantees, bonds and capital contributions totaled 4.8 billion euros. In addition, the federal government may acquire up to a quarter of Tui’s shares.

Industry expert: “Too short-lived and inappropriate”

The news was badly received on the stock exchange: Tui’s share price, meanwhile, fell by nearly seven percent. Industry expert Rebecca Lin of analysis firm Jefferies has classified the move as too short-term and insufficient. A convertible bond guarantees additional Tui sheet for just over an additional month. Generally, group funds should last about six months – if customers’ compensation claims are excluded, at their discretion.

The convertible bond must last until April 16, 2028 and can be converted into new shares of Tui Group at a premium of 25-30 percent. The interest rate should be 4.5 to 5 percent. Tui wants to define and announce the exact terms on Friday.

This article is made from dpa material Updated.

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