TUI: shares drop after company launches rights issue

(CercleFinance.com) - TUI is raising approximately 544.
6 million euros to repay debt and improve its liquidity, the German tourism group said on Friday.

Under the fully underwritten deal, TUI is issuing 509 million new shares in the company, with shareholders offered 25 new shares for every 29 existing shares they hold, the company said.

The main purpose of this capital increase is to fully repay a 300 million euro bond issued in 2016, it said.

The company said it intends to use the remaining net proceeds from the offering, or about 195 million euros, to strengthen its liquidity.

However, analysts still said the group's capital structure is not sustainable given its considerable level of debt. TUI still faces an uncertain future, they pointed out, and the shares were battered on the London Stock Exchange as a result, down 16% on Friday morning.

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