Tui plans to repay a fresh tranche of debt to German state-aid institutions, having pledged to accelerate the repayment of pandemic-era financial support after reporting a “strong recovery” last week.
In a statement today, Tui announced plans to repay more than €1 billion through a shares issue and existing cash resources, leaving less than €500 million in aid outstanding.
The group reported: “The Corona state aid received in the pandemic is to be returned as quickly as possible” as it seeks “to execute its goal of rapidly deleveraging [and] reducing interest costs.”
Tui plans to issue more than 162 million new shares, corresponding to up to 10% of the group’s share capital, and use the proceeds to repay in full a €671 million loan from the German government’s Economic Stabilisation Fund (ESF).
In addition, it will reduce the amount outstanding from the German state development bank, the KfW, by €336 million.
Tui returned about €700 million to the KfW on April 1.
Chief executive Fritz Joussen said: “We are implementing what we announced and committed to – the further repayment of the Corona aid – and doing so as fast as possible. Our goal is to return to normality quickly and focus on new growth.
“We expect a strong summer of travel and . . . for the current full year 2022, we expect to return to significantly positive earnings.
“This is the basis for continuing to steadily and swiftly reduce the financial support and lower our debt and interest costs.”
Joussen signalled a fresh repayment of Tui’s debt was imminent last week when reporting Tui’s half-year results to the end of March, saying: “The liquidity in the system in line with pre-payments coming encourages us to think of returning more money to the state.”
The shares will be offered exclusively to institutional investors as part of a private placement. The exact number of new shares and their price has yet to be determined.
The share issue will also dilute the holding of Russian oligarch Alexei Mordashov, who was on the Tui supervisory board until resigning on March 2.
Mordashov was sanctioned by the EU along with other wealthy Russians at the end of February and his assets, including the shares in Tui, frozen.
Tui remains two-thirds owned by investors other than Mordashov ahead of the shares issue, with almost 35% in private hands, 29% held by institutional investors and 2.4% by Spanish hospitality group and Tui partner Rui Hotels.
However, Mordashov played a key role in financing the group through the pandemic, joining a round of refinancing in December 2020 alongside the KfW and Germany’s ESF, and he underwrote a shares issue in January 2021 which raised his Tui stake to 34%.
Joussen declined to answer questions about Mordashov’s holding in the group last week, insisting there was “nothing to report.
“There is no change in the situation. It’s not in our hands,” he said.