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