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Allen & Overy advises TUI AG on EUR 1.8 bn capital increase

Frankfurt am Main, 24 March 2023. Allen & Overy is advising TUI AG (“TUI”) in connection with a capital increase with subscription rights from the Authorised Capital 2022/I and Authorised Capital 2022/II to raise gross proceeds of EUR 1.8 billion. The proceeds from the offering will serve to repay state aid under the German Economic Stabilisation Fund (Wirtschaftstabilisierungsfonds; WSF) and to significantly reduce the KfW credit line to strengthen its balance sheet.
328,910,448 new shares (the “new shares”) will be offered at a subscription ratio of 8:3 (8 new shares for every 3 existing shares). The subscription price of EUR 5.55 per new share represents a discount to the TERP (theoretical share price after the capital increase) of approx. 39.85%.
The shares held by Alexey A. Mordashov, who indirectly holds 30.91% in TUI via Unifirm Limited and Severgroup LLC, or any connected person or entity (together the “Major Shareholder Sanctioned Persons or Entities”) are subject to a loss of rights as a result of far reaching sanctions and under German securities law. The Major Shareholder Sanctioned Persons or Entities therefore cannot participate in the rights issue and no subscription rights will be granted to them.
TUI intends to use the net proceeds from the capital increase to reduce interest costs and debt. As previously agreed with the WSF, TUI will in this context repay in full or buy back at market value the Silent Participation I provided by WSF in a nominal EUR 420 million and the outstanding Warrant Bond 2020/2026 including warrants of  EUR 58.7 million, including accrued interest, at their total market value of around EUR 750 million.
Additionally, the net proceeds will be used for full repayment of current drawings under the KfW credit line, which as of 23 March 2023 amounted to around EUR 440 million. With the remaining net proceeds of approx. EUR 568 million, the current drawings of around EUR 1.437,8 billion under the EUR 1.454 billion Cash Facility will be reduced to around EUR 870 million. In addition, the Group intends to significantly reduce the EUR 2.1 billion KfW credit line to EUR 1.1 billion.
Today’s announced capital increase and significant repayment of government funding allows for a considerable improvement in TUI’s credit metrics and reduces ongoing interest costs, allowing TUI to focus on growth and further market recovery.
Including this capital increase, Allen & Overy has advised TUI on equity capital market refinancings of Covid triggered state aid with a total volume of more than EUR 4 billion over the past two years.
The German Allen & Overy team is being led by partner Dr Knut Sauer and counsel Nadine Kämper (both Equity Capital Markets, Frankfurt) and includes partners Dr Hans Diekmann (Düsseldorf), Dr Helge Schäfer, Dr Jonas Wittgens (all Corporate/M&A, both Hamburg) and Dr Udo Olgemöller (Public Law, Frankfurt), counsel Dorothee Kupiek, senior associate Dr Jan Danelzik (both Corporate/M&A, Düsseldorf) and Associate Vincent Buchta (Equity Capital Markets, Frankfurt).
Lead advisers on English law are the partners Michael Bloch and Stephen Mathews (both Corporate/M&A), as well as partners Lydia Challen (Tax), Matt Townsend (Regulatory), associates Holly Gardiner, Will Johnson (both Corporate/M&A) and Alexander Cook (Regulatory). In addition, the team is supported by trainees Makeda Brown (Banking & Finance), Evie Haywood and Saurav Zangeneh (both Corporate/M&A, all London).
Partner Jeff Hendrickson, associate Valerio Di Mascio and US law clerk Isidora Parga (all US Corporate Finance, London) advise on US law.
TUI is being advised in-house by Mark Hoepfner (Senior Legal Counsel).

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