Mathias Kiep, last Friday, TUI announced that the group was proceeding with a new capital increase. What does that mean exactly?
On March 24, TUI approved the fully subscribed capital increase with subscription rights of 1.8 billion euros. This means that shareholders have the option of buying new shares at a lower subscription price. This gives a company new social capital.
Why is the stock price so low today?
For the fully subscribed capital increase, 328,910,448 new shares will be offered at a subscription ratio of 8:3, ie 8 new shares for 3 existing shares, and at a subscription price of 5.55 euros. As new shares are thus placed on the market, the value of the share decreases, but the share capital of the Company increases.
What does this mean concretely?
The subscription rights will be separate from the shares and may be traded by existing shareholders. Therefore, there are now effectively two parts: the non-rights share and the right itself, which is also traded and no longer priced into the share. To arrive at the real value of the share, we must again add the two: the current price of the share and the value of the subscription right. The latter can be calculated, but results from supply and demand on the stock exchange. The previous share price must therefore be compared to the sum of the share price excluding the subscription right and the subscription right.
Why is this measure necessary?
During the pandemic, TUI was one of the first companies in Germany to receive state aid. This was necessary to finance the Group in a difficult period. However, this aid was not a gift and must of course be repaid plus interest.
TUI was already able to repay part of this state aid and credit lines in July last year. The group now plans to use the proceeds of the ongoing capital increase to fully repay the FSM aid and significantly reduce the KfW credit line to reduce interest charges and debt.
The group estimates that during a successful implementation of the capital increase and the announced repayment of government assistance, net debt will improve significantly, from 3.4 billion euros in 2022 to 2.4 billion euros.
The gross leverage for the whole of 2023 would thus already return to the pre-crisis level and fall to around 3.0x. In addition, the old hybrid capital of the federal government will be entirely replaced by real equity. The capital increase is therefore an important step in order to be able to grow profitably in the future.
Who can participate in the capital increase and for how long?
All TUI shareholders have the possibility to exercise their subscription rights. You will be informed of this by your custodian bank. Sanctioned shareholders remain excluded from exercising their subscription rights. The subscription period ends on April 17, 2023. The negotiation of subscription rights ends a few days earlier, on April 12, 2023. Shareholders who do not wish to participate in the capital increase do not have to act. Their rights will be sold by most banks on the last rights trading day.
Further information on the financial measures can be found in the press release or also in the section Investor Relations.
