Tui achieved a successful result with its convertible bond issue, launched after the market close on Thursday evening July 18, pricing it towards the best end of terms for the issuer.
The German travel company, which recently closed its London listing and is now only listed in Frankfurt, launched a €475m CB on Thursday evening, with a concurrent delta placement of up to €110m of shares for CB buyers wanting to hedge their long positions in the stock.
Bank of America, HSBC, Crédit Agricole, Commerzbank and UniCredit were global coordinators on the CB issue and dealer managers on the associated tender offer, Tui said on Friday.
The same five, with Oddo BHF cooperating with Commerzbank, were also glocos for the block trade.
Bank of America and HSBC led a wall-crossing before the deal.
The par-in, par-out seven year Reg S CB, puttable at four years, was launched with a fixed coupon of 1.95% and conversion premium range of 42.5% to 52.5% above the reference price, to be set in the concurrent block trade.
Having launched the deal at 6pm German time and issued a covered message at 6.30, at 8.20 the leads said orders for the shares below €6.40 risked missing, as did orders for the CB below a 50% premium. Books were to close at 8.45.
The CB ended as €479m at 50% and the block trade was priced at €6.40, a 5.2% discount to the closing price of €6.75. That means the initial conversion price will be €9.60.
According to Dealogic, the block trade ended as 14.8m shares, less than the maximum foreseen of 16.3m, and fetched €94.7m. It listed as lead managers the same five banks that were glocos on the CB, again without Oddo BHF.
Tui will now conduct a tender offer using what it said on Thursday would be up to €472m of the new bond proceeds to buy back at 101.5 its 5% convertibles due 2028, of which there is €589.6m outstanding.
Tui’s shares fell 3.1% on Friday, to €6.55.
Tui said in its statements on Thursday and Friday that the deal was “the final step towards the refinancing of the KfW credit line now further reducing it, as contractually agreed, from the current €550m to approximately €210m and handing back the remainder in the first half of calendar year 2025”. The deal also extends Tui’s maturity profile and “significantly” reduces its interest costs.