TUI AG: Additional financing programme agreed with the participation of shareholders, banks and the German Economic Support Fund (WSF)

Hannover, 2-Dec-2020, 15:40 CET: TUI AG has agreed with Unifirm Ltd., a syndicate of underwriting banks, KfW and the Economic Support Fund (Wirtschaftsstabilisierungsfonds – WSF) on a further financing package of € 1.8 billion for TUI.

The package includes

• a capital increase with subscription rights of approx. € 500m;
• a silent participation convertible into shares of TUI by the WSF of € 420m;
• a non-convertible silent participation by the WSF of € 280m;
• a state guarantee of € 400m, or, alternatively, a respective increase of the non-convertible silent participation by the WSF; and
• an additional credit facility by KfW of € 200m, and a prolongation of an existing credit facility by KfW until July 2022.

The financing package strengthens TUI's position and provides it with sufficient liquidity reserves in this volatile market environment. It also balances out the presumed travel restrictions until the beginning of the 2021 summer season. The package became necessary due to the increasing travel restrictions caused by the rising number of infections and the associated more short-term booking behaviour of some customers.

This further financing package supplements the existing financing measures of the Federal Republic of Germany in the form of a KfW credit line at a total of € 2.85 billion and a WSF warrant bond of € 150 million with option rights for approx. 58.7 million shares.

The financing package includes a WSF financing measure in the form of a silent participation without a participation in losses generated by TUI, which can be converted into shares of TUI, in the amount of € 420 million (Silent Participation I), and a further silent participation with a participation in losses generated by TUI of € 280 million (Silent Participation II).

The conversion price for the WSF in respect of the Silent Participation I is € 1.00 per share. In case of a conversion of the Silent Participation I the WSF will obtain a participation in TUI of not more than 25% plus one share.

The agreement on the silent participations is, inter alia, subject to the approval of the European Commission under state aid rules, the granting of the necessary merger control approvals (where there is a prohibition on implementation) and the implementation of the other components of the financing package.

In addition, KfW has undertaken – subject to market standard conditions – to participate in a further secured credit line of € 200 million and to grant a prolongation of a portion of the existing KfW credit line. The prolongation relates to a part of the existing KfW credit line of € 500 million, which would have otherwise ceased to be available on 1 April 2021 and which will after the prolongation have the same maturity as the rest of the existing KfW credit line. The agreement on the participation by KFW is, inter alia, subject to the implementation of the other components of the financing package.

The financing package also provides for a reduction of TUI’s share capital from € 2.56 per share to € 1.00 per share (without merging shares), followed by a capital increase by means of a rights issue of approx. 509 million shares. The reduction of the share capital, the capital increase and the conversion rights of the WSF under the Silent Participation I are to be resolved at an extraordinary general meeting of TUI in January 2021. The subscription price shall be € 1.07 per share, implying net proceeds after fees and expenses of approx. €509 million. As TUI's largest single shareholder, holding approx. 24.89 % of the shares, Unifirm Ltd. has irrevocably committed to exercise its subscription rights in this capital increase (the Confirmed Acquisition Declaration).

The remainder of the capital increase will be safeguarded through underwriting commitments, subject to certain terms and conditions. In this respect, Unifirm Ltd. has undertaken, in addition to its Confirmed Acquisition Declaration, and if the current shareholders do not subscribe to their new share entitlements, that it will (i) subscribe for further newly issued shares up to a total stake of 36%, where this is possible without making a mandatory offer to the other shareholders of TUI based on an exemption from BaFin under the German Securities and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz, WpÜG) (the Conditional Commitment), and (ii) otherwise subscribe for further newly issued shares up to a total stake of 29.9% (the Unconditional Underwriting Commitment). The remaining part of the capital increase will be secured through a market standard underwriting by a banking syndicate, subject to terms and conditions in line with market practice for similar transactions, also as far as the aforementioned exemption for Unifirm Ltd. should not be granted by BaFin.

The proceeds of the capital increase will be used to repay € 300 million senior notes of TUI (due in October 2021) and so will provide a significant contribution to the extension of TUI’s maturity profile. The remaining amount of the capital increase, and more generally the financing package, is intended to strengthen TUI's liquidity or to be used for general corporate purposes.

The financing measure shall also include a guarantee credit facility in the amount of € 400 million. The guarantee credit facility will be supported by a state guarantee, potentially including the federal states. It is intended to enable access to funds currently deposited for so-called cash collaterals by replacing the cash collaterals with guarantees. As an alternative, the Silent Participation II of the WSF will be increased.

Including the financing package now agreed, as of 30 November 2020 TUI has pro forma financial resources and credit facilities of € 2.5 billion post € 300m Senior Notes redemption.

In addition to the restrictions under the existing KfW loan, such as TUI's waiver of dividend payments and a restriction on share buy-backs, the silent participations by the WSF come with further restrictions, including relating to investments in other companies as long as the WSF remains invested. In addition, to the extent permitted by law, the Executive Board and the Supervisory Board shall procure that two persons nominated by the WSF become members of the Supervisory Board of TUI.

Given the UK Listing Rules applicable to TUI as a premiumlisted company on the London Stock Exchange, TUI points out the following: the maximum aggregate underwriting commitment of Unifirm Ltd. (for the purposes of the UK Listing Rules, i.e. beyond the exercise of the subscription rights for Unifirm’s existing stake in TUI as per the Confirmed Acquisition Declaration) is € 130.7 million and it, together with the maximum fees payable, falls within the smaller related party transactions provisions of UK Listing Rule 11.1.10R. Unifirm Ltd. will receive an underwriting fee of 2.75% for its Unconditional Underwriting Commitment and an underwriting fee of 2.00% for its Conditional Underwriting Commitment.

As required by Listing Rule 11.1.10R, Merrill Lynch International, which is acting as joint sponsor, together with Deutsche Bank AG, London Branch, to TUI for UK Listing Rules purposes in respect of the related party transaction described above, has provided written confirmation to TUI that the terms of Unifirm Ltd.’s underwriting commitments, in its opinion, are fair and reasonable as far as the shareholders of TUI are concerned.

Not least in view of the imminent availability of vaccines against COVID-19, TUI expects a significant reduction in current travel restrictions, and thus a significant further improvement in its working capital and liquidity situation. Holidays continue to be a high priority for our customers, and we continue to work on different demand scenarios for the coming seasons.

This announcement may not be published, distributed or transmitted in the United States, Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa, Switzerland or the United Arab Emirates, or in any other jurisdiction in which the distribution, release or publication would be restricted or prohibited. This announcement does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities of the Company (the “Securities”) in the United States or any other jurisdiction. The distribution of this announcement into jurisdictions may be restricted by law, and, therefore, persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction.

The Securities are not and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States.

This announcement is an advertisement and not a prospectus for the purposes of the Prospectus Regulation. Any offer of securities will be made exclusively by means of and on the basis of a securities prospectus. A final form prospectus, which may be approved by BaFin, will be prepared and if approved, made available to the public in accordance with the Prospectus Regulation. The final form prospectus, when published, will be made available on the website of the Company (www.tuigroup.com).

None of Barclays Bank Ireland PLC, BofA Securities Europe SA, Citigroup Global Markets Europe AG or Deutsche Bank AG (together, the “Joint Global Coordinators”) or Deutsche Bank AG, London Branch and Merrill Lynch International (together, the “Joint Sponsors”) nor any of their respective affiliates nor any of its or their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, fairness, sufficiency, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company or the Capital Increase and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Each of the Joint Global Coordinators, the Joint Sponsors, and their respective affiliates and its and their respective directors, officers, employees, advisers or agents accordingly disclaims to the fullest extent permitted by law all and any responsibility and liability whether direct or indirect, arising in tort, contract or otherwise which it might otherwise have in respect of this announcement or any such statement. Furthermore, each of the Joint Global Coordinators, the Joint Sponsors and/or their affiliates may provide various investment banking, commercial banking and financial advisory services from time to time to the Company.

Barclays is regulated by the Central Bank of Ireland. BofA Securities is authorised as an investment firm by the Autorité de Contrôle Prudentiel et de Résolution (“ACPR”), is regulated by the ACPR and the Autorité des Marchés Financiers, and is not a credit institution. Merrill Lynch International is authorised by the Prudential Regulation Authority (“PRA”) and regulated in the United Kingdom by the PRA and the Financial Conduct Authority. Citigroup is authorised under German Banking Law (competent authorities: European Central Bank and German Federal Financial Supervisory Authority (“BaFin”). Deutsche Bank is authorised under German Banking Law (competent authorities: European Central Bank and BaFin) and, in the United Kingdom, by the PRA and is subject to supervision by the European Central Bank and the BaFin, and to limited supervision in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority. Details about the extent of Deutsche Bank’s authorisation and supervision by these authorities are available on request.

Each of the Joint Global Coordinators is acting exclusively for the Company in connection with the Capital Increase and each of the Joint Sponsors is acting exclusively for the Company in connection with a related party transaction in relation to the Capital Increase and are acting for no one else. They will not regard any other person as their respective clients in relation to the Capital Increase and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the Capital Increase, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company, the Joint Global Coordinators, the Joint Sponsors or any of their respective affiliates and its and their respective directors, officers, employees, advisers or agents.

Forward-Looking Statements

Certain statements included in this announcement are forward-looking. These statements can be identified by the fact that they do not relate only to historical or current facts. By their nature, they involve risk and uncertainties because they relate to events and depend on circumstances that will occur in the future. Actual results could differ materially from those expressed or implied by such forward-looking statements. The potential reasons for such differences include market fluctuations, the development of world market fluctuations, the development of world market commodity prices, the development of exchange rates or fundamental changes in the economic environment. TUI does not intend or assume any obligation to update any forward-looking statement to reflect events or circumstances after the date of this announcement.

Forward-looking statements often use words such as “expects”, “may”, “will”, “could”, “should”, “intends”, “plans”, “predicts”, “envisages” or “anticipates” or other words of similar meaning. They include, without limitation, any and all projections relating to the results of operations and financial conditions of TUI AG and its subsidiary undertakings from time to time (the ”Group”), as well as plans and objectives for future operations, expected future revenues, financing plans, expected expenditure and divestments relating to the Group and discussions of the Group’s business plan. All forward-looking statements in this announcement are based upon information known to the Group on the date of this announcement and speak as of the date of this announcement. Other than in accordance with its legal or regulatory obligations, the Group does not undertake to update or revise any forward-looking statement to reflect any changes in events, conditions or circumstances on which any such statement is based.

Actual results may differ from those expressed or implied in the forward-looking statements in this announcement as a result of any number of known and unknown risks, uncertainties and other factors, including, but not limited to, the effects of the COVID-19 pandemic and uncertainties about its impact and duration, many of which are difficult to predict and are generally beyond the control of the Group, and it is not reasonably possible to itemise each item. Accordingly, readers of this announcement are cautioned against relying on forward-looking statements. All forward-looking statements made on or after the date of this announcement and attributable to the Company are expressly qualified in their entirety by the primary risks set out in that section. Many of these risks are, and will be, exacerbated by the COVID-19 pandemic and any further disruption to the travel and leisure industry and economic environment as a result.