TUI, the world’s leading integrated tourism group, has received backing from the German government for an additional tranche of €1.05 billion that extends its exiting tranche with KfW, the German state-owned development bank based in Frankfurt.
The extension of the existing credit line by €1.05 billion will be subject to TUI issuing a Convertible Bond in the amount of €150 million to the Economic Stabilisation Fund (WSF) and a waiver by the Bondholders of the Senior Notes which are due in October next year. The new stabilisation package will strengthen the Group’s position, providing it with sufficient liquidity – cash and credit facilities of €2.4 billion – to cope with volatile market conditions.
TUI CEO Fritz Joussen commented: “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.”
As with 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 (“Revolving Credit Facility”, RCF). 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 provision that the holders of the bond maturing in October 2021 waive any future limitation of TUI’s indebtedness. (€1.00 = US$1.18 at time of publication.)Email Post to a Friend