Holiday company TUI AG said on Friday it was raising up to €400 million through an issuance of convertible bonds, to improve its liquidity and help pay down debt taken on to survive the pandemic.
Germany-based TUI, the world's largest holiday company, has secured multiple bailouts from the German government to ride out the pandemic, and is hoping for a summer pick-up in travel to help repair its balance sheet.
The company said the offering of €350 million of senior unsecured bonds due 2028 comes with an option to increase the issuance volume by €50 million.
Shares in TUI traded down 7% after the company launched the bond offering.
'The Bonds offer a coupon of between 4.5% and 5.0%, which is not cheap when compared to recent funding rounds by airlines in the travel space,' Goodbody analysts said in a note.
TUI's net debt has ballooned to €7.2 billion during the pandemic and the company needs to start repayments in 2022.
Summer Holiday Rebound
It is counting on a summer holiday rebound, but it has already lowered capacity for July onwards to 75% of 2019's level from 80% previously.
TUI, which took 27 million people on holiday a year before the pandemic, said that although it has slightly trimmed capacity, it has the ability to flex it up at short notice.
Britain, which alongside Germany is TUI's biggest market for holidaymakers, said on Friday it would provide more details on summer trips in early May, but initial plans to require expensive PCR tests for low-risk international travel, left the travel industry reeling.
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