👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

Tui falls 10% to 5-month low on capital increase, aid repayment

Published 03/24/2023, 04:16 AM
Updated 03/24/2023, 04:57 AM
© Reuters.

© Reuters.

TUI1n
-1.99%

By Geoffrey Smith 

Investing.com -- Shares in Tui (ETR:TUI1n) fell by 10% at the open on Friday after the German-based tour operator launched a steeply discounted rights issue to help it repay pandemic-era government aid.

The company said it will raise €1.8 billion in new equity, at a price of €5.55 a share, a discount of nearly 40% to Thursday's closing price.

Tui will spend €750 million to repay all its outstanding obligations to the WSF, a German government vehicle set up in early 2020 to disburse liquidity support to companies hurt by the pandemic. It will also repay €440M drawn under a €750M credit facility with development bank Kreditanstalt für Wiederaufbau. This will allow it to reduce the size of its facility with KfW by just under half to €1.1B.

The remaining €568M in proceeds will be used to pay down current borrowings under its other credit facilities.

"Today's announced capital increase and significant return of government funding allows for a considerable improvement in TUI's credit metrics and reduces ongoing interest costs, allowing the Group to focus on growth and further market recovery," the group said in a statement.

The company didn't add much about the ongoing state of operations, other than to confirm the "encouraging booking momentum" that it reported last month.

The rights issue, which will offer existing shareholders eight new shares for every three they hold, will significantly dilute the Russian steel billionaire Alexei Mordashov, who is subject to western sanctions and barred from the offering. Mordashov's stake will fall from just over 30% currently to a little over 10%.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

By 04:45 ET (08:45 GMT), Tui stock had recovered a little to trade down only 6.3%.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.