TUI is set to receive a €1.8 billion ($2.2 billion) financial support package from German government fund WSF, largest shareholder Unifirm and a consortium of banks, aimed at securing the tourist group’s operation amid the coronavirus crisis.
The package is TUI’s third since the crisis began. In April, the Hannover-headquartered group received €1.8 billion from state-owned development government bank KfW. This was followed by another €1.2 billion package from KfW in August.
TUI says the latest package became “necessary due to the increasing travel restrictions caused by the rising number of infections and the associated more short-term booking behaviour of some customers”.
The group adds: “The financial package is intended to ensure that the company can bridge the gap if the pandemic persists in 2021.”
Chief executive Fritz Joussen states: “With these measures, the group is securing liquidity for a continuing pandemic in 2021, while at the same time improving our balance sheet structures in the long term.”
The package includes an approximately €500 million capital increase with subscription rights; a silent participation, convertible into shares, by WSF, worth €420 million; a nonconvertible €280 million silent participation by WSF; a €400 million state guarantee, which could alternatively increase the nonconvertible silent participation by WSF; an additional €200 million KfW credit facility; and prolongation of an existing KfW credit facility until July 2022.
TUI’s largest single shareholder, the Mordashov family, which holds a 24.9% shareholding through an entity named Unifirm, has “irrevocably committed to exercise its subscription rights in this capital increase”, the tourism group says.
It notes that the silent participations still require approval by the European Commission.
Including the newly agreed support package, TUI had financial resources and credit facilities of €2.5 billion at the end of November, it says.
Subscription rights for the capital increases are to be resolved during an extraordinary general meeting in January.
“Before the corona pandemic, TUI was a very healthy company,” Joussen asserts. Despite the absence of “any significant revenues since March”, he insists “the market is intact, the demand is there.
“People want to travel, tourism remains a growth industry and an important sector for stabilising the southern euro area. The financial package provides the security to look consistently ahead and to prepare the group strategically and structurally for the time after the pandemic.”