Tui: Share price crashes 9.4 per cent over travel giant’s plan to raise £1.6bn for Covid loan repayment
Shares in Tui today plummeted by more than 9.4 per cent after the travel company announced plans to raise €1.8bn (£1.6bn) to repay loans given to it by the German government during Covid-19.
Tui, the world’s largest travel company, today set out plans to sell 328,910,448 new shares, at a 29.85 per cent discount of €5.55 each, in its bid to raise €1.8bn to pay off the German state aid.
The FTSE 250 company received more than €4bn in loans from the German government to help it survive the devastating effects of lockdown restrictions on the global travel industry.
Tui today said its bid to pay off the state loans would allow for a “considerable improvement” in its credit metrics which would in turn reduce the travel firm’s ongoing interest costs.
The Hanover firm’s repayments will see it reduce its debts by €1bn, with Tui having previously owed €3.4bn as of 30 September 2022.
Tui said it would repay in a full a €750m loan given to it through the German government’s economic stabilization fund, WSF, that was created to bail out the country’s economy during the pandemic.
The travel company said it would also repay loans given to it by Germany’s state-owned KfW development bank.
In paying off the loans, Tui is set to cut its net interest payments by €80-€90m over a 12 month period.
At the time of reporting, shares in Tui are down 6.54 per cent having recovered slightly during this morning’s session.