TUI Travel to raise 440m to repay loan

TUI Travel, Europe&rsquo;s biggest tour operator yesterday said it would raise &pound;440m to help finance &pound;900m of borrowings, as it cautioned that winter booking volumes remained lower than last year.<br /><br />TUI Travel said it would launch a &pound;300m five-year convertible bond issue and had agreed a new credit facility worth &pound;140m in a bid to refinance a &pound;900m loan from TUI AG. TUI AG has a 51.6 per cent shareholding in the company.<br /><br />As a result of the refinancing, TUI has been able to extend its loan repayment schedule, and the deadline for the final &pound;150m repayment is deferred until April 2011.<br /><br />The refinancing marks the end of persistent market chatter that TUI AG might seek to swap the remaining loan, for some of TUI Travel&rsquo;s continental travel business.<br /><br />Chief executive Peter Long said: &ldquo;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 M&amp;A opportunities.&rdquo;<br /><br />TUI Travel also announced the creation of a strategic venture with Sunwing, a leading tour operator in the Canadian market, for &pound;55m. In return TUI will gain a 49 per cent stake in Sunwing.<br /><br />Long said the group has spent &pound;120m on acquisitions in the current year and expected to spend even more next year.