Tour operator TUI AG (LSE:TUI) announced it is raising €1.8bn by issuing stock at €5.55 per share as it bids to significantly reduce its debt pile.
The move comes after TUI's agreement with the German Economic Stabilization Fund (WSF) and a successful 10:1 reverse stock split.
The company plans to use the net proceeds of around €1.75 billion to reduce interest costs and debt.
This includes repaying €420mln to the WSF, €58.7mln in bonds, and reducing the €2.1 billion credit line to €1.1bn.
The capital increase will improve TUI's credit metrics, allowing the group to focus on growth and market recovery.
TUI's net debt would have been reduced by €1bn, lowering net interest payments by €80-90mlm annually. The company's gross leverage ratio for its financial year 2023 is expected to fall to around 3.0 times.
TUI also confirmed continued strong booking momentum, as reported in its first-quarter results on February 14, 2023.