TUI: shares drop after new financing package

(CercleFinance.com) - Shares of Germany's TUI sank 5% on Thursday as investors shunned the announcement of a new financing package of 1.
8 billion euros, including a capital increase of around 500 million euros.

Late on Wednesday the troubled tourism group said that it has reached an agreement with private investors, banks and the German federal government to provide it with sufficient liquidity in the current market environment.

The package includes a capital increase with subscription rights of approximately 500 millions euros and a loan convertible into shares by Germany's Economic Support Fund, or WSF, of 420 millions euros, it said.

The deal also includes a non-convertible bond by the WSF of 280 million euros, a state guarantee of 400 million euros and an additional credit facility by a syndicate of underwriting banks of 200 million euros, the group added.

"The additional financing package would allow TUI to last until next summer, when a constructive business resumption is expected to be seen," commented French research house AlphaValue, which has a "sell" rating on the shares.

Analysts at UBS, who also maintain a "sell" rating on the stock, said TUI's next catalyst will be full-year results, on 10 December, where it expects the company to focus on cash generation capacity for next year and its plans to reduce debt.

Copyright (c) 2020 CercleFinance.com. All rights reserved.