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TUI to raise £440m to pay off loan and fund acquisitions
TUI plans to raise about £440 million to refinance its shareholder loan with its parent, TUI AG, and to fund acquisitions.
The travel giant intends to raise £300 million through the issue of a convertible bond due 2014 to institutional investors, while its banks have agreed to credit facilities of the remaining £140 million, maturing in June 2012.
Its £938 million shareholder loan from TUI AG, which owns 52% of the London-listed group, is due to be repaid in January 2011.
But under a new repayment schedule, the final £150 million will be repaid at the end of April 2011.
“The financing measures announced today allow us to commence repayment of our shareholder loan in a pro-active manner and will also allow us to continue to take advantage of attractive mergers and acquisitions opportunities and to build on our successful track record of creating value through our acquisition strategy,†said chief executive Peter Long.
These include plans for “bolt-on acquisitions†of niche, higher growth businesses in the specialist sectors.
“The pipeline of potential acquisitions is strong at present and we envisage the level of investment in the medium term to be similar to recent years,†said TUI’s statement.
It said it was also interested in transactions that provide “an opportunity to consolidate mainstream markets and act as catalysts to drive the turnaround of underperforming businesses in the mainstream sectorâ€.
It will also continue to look for opportunities in emerging markets, with a focus on Russia & CIS.
TUI announced today that it has spent £55 million taking a 49% interest in tour operator Sunwing to strengthen its position in the Canadian market.
By Bev Fearis
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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