TUI extends borrowing with third bailout from German government, banks, and investors

©TUI

TUI, the world’s largest holiday company, has secured a third major financial bailout to help it cope with the knock-on effects of the COVID-19 pandemic on the travel industry. Having already secured €3 billion in state loans this year, the company has announced that it has struck a deal with the German government, banks and private investors to borrow an additional €1.8 billion.

TUI lost €1.1 billion in the second quarter of 2020, having flown 23 million holidaymakers in 2019. Currently the company is burning through approximately €600 million a month. Including this new loan, TUI now has reserves of €2.5 billion, as of December 1, to help the business recover post pandemic. According to Reuters news agency, TUI’s largest shareholder, Russian billionaire Alexey Mordashov, who owns 25% of the company, will be expanding his investment as part of the capital measures, his stake increasing to 36% if he gets an exemption from financial watchdog Bafin from making a mandatory takeover offer. Otherwise, he will hike it to 29.9%.

The package comes with a ban on management bonuses and dividends, a German economy ministry spokeswoman said. However, budget lawmaker Sven-Christian Kindler from the opposition Greens called on the government to include strict rules on climate and job protection into the package. The new TUI rescue package includes a €500 million capital increase with subscription rights and a €420 million so-called silent participation from Germany’s economic support fund WSF, which can be converted into equity at any time. It also includes a non-convertible equity hybrid from WSF worth €280 million, a state guarantee of €400 million, an extra €200 million credit facility from state bank KfW and the extension of an existing KfW facility to July 2022. (€1.00 = US$1.21 at time of publication.)

Email Post to a Friend Email Post to a Friend