The world’s largest travel group Tui is repaying the remaining state aid from the Corona crisis. With fresh money from shareholders, the group wants to repay the aid money granted by the Economic Stabilization Fund (WSF) by the end of 2023, with which the German state saved it from going under in the face of the business slump as a result of the pandemic.
According to the information, it is about at least 730 million euros plus interest, as Tui surprisingly announced in Hanover. The group wants to raise the necessary money by issuing new shares.
The Tui management has concluded a new agreement with the WSF for the repayment. It is about a silent participation and a bond with warrants, with which the fund had supported the group. As part of the new agreement, the WSF will also waive the right to convert the silent participation into new Tui shares until the end of 2023 and thus become a major shareholder in the group itself. In addition, Tui wants to reduce the credit lines of the state bank KfW, which according to the information currently amount to 2.1 billion euros.
“Rapid return of state aid was always our goal,” said the new CEO Sebastian Ebel, who took over the management of the group from long-time Tui boss Fritz Joussen at the beginning of October. Now is the right time for the repayment: “Tui is stable and on the way back to sustainable, profitable growth.”
Shareholders and the EU Commission still have to agree
The summer of 2022 was strong and the restructuring of the group is paying off more and more, said Ebel. “That is also reflected in our figures.” The group still has a challenging path ahead of it. “But our strategy, our future-proof business model, the restart of tourism and promising customer and travel trends make us confident about our path back to normal.”
This Wednesday (December 14), the group intends to present the figures for its fiscal year, which ended at the end of September.
In order for the state aid to be repaid as planned, the shareholders and the EU Commission still have to agree. At the Annual General Meeting in February 2023, the shareholders are to initially agree to a capital reduction from almost 1.8 billion to just 179 million euros. The reduction amount of around 1.6 billion euros is to be allocated to the company’s capital reserve and not distributed to the shareholders.
In this context, the Tui shares are to be combined at a ratio of ten to one – in other words: anyone who previously owned ten shares only has one afterwards. This is intended to significantly increase the difference between the expected market price after the reverse stock split and the lowest issue price, which is the nominal value of one euro. This enables capital increases at normal market conditions, it said. “I ask our shareholders to approve this path and the roadmap for implementation,” said Ebel.
CFO Mathias Kiep, who is also new, sees the project as an opportunity to reduce the group’s debt. “With the possible full repayment of the WSF aid and the reduction of the KfW credit lines, we strengthen our balance sheet, we benefit from lower interest payments and we gain further financial and entrepreneurial flexibility in implementing our strategy for future profitable growth,” he said .
