By Ronda Fears
Nashville, Oct. 7 - European travel firm TUI AG sold €350 million of five-year convertible notes, on a call spread, at par to yield 4.0% with a 47.5% initial conversion premium.
Citigroup, HVB Corporates & Markets and WestLB AG are joint lead managers of the Regulation S deal, which sold at the middle of price talk that put the coupon at 3.75% to 4.25% and premium at 45% to 50%.
Concurrently with the convertible sale, TUI will enter into a cash-settled call spread transaction with the lead managers, effectively boosting the conversion price up to 30%.
Proceeds from the issue will primarily be used to refinance existing debt, thereby extending the company's debt maturity profile. In this context, TUI has already signed a syndicated loan of €800 million with a maturity of three years.
Also, TUI said Tuesday that for fiscal 2003 its earnings expectation is increasing.
Backlog in booked turnover for the 2003 summer season decreased below 6%, the company said, so earnings in July and August were good and preliminary results for September are promising.
Third quarter earnings before tax and goodwill amortization are expected to come close to prior year figures, the company said, and fourth quarter earnings are expected to be about 4% better than the previous year, based on actually booked turn-over for the 2003/2004 winter season and other factors.
Terms of the deal are:
Issuer: TUI AG
| Issue: | Convertible bonds
|
| Joint lead managers: | Citigroup, HVB Corporates & Markets and WestLB AG
|
| Amount | €350 million
|
| Maturity: | 2008
|
| Coupon: | 4.0%
|
| Price: | Par
|
| Redemption price: | Par
|
| Yield: | 4.0%
|
| Conversion premium: | 47.5%
|
| Conversion price: | €21.624
|
| Conversion ratio: | 46.246
|
| Call: | Non-callable
|
| Price talk: | 3.75-4.25%, up 45-50%
|
| Pricing date: | Oct. 7
|
| Settlement date: | Oct. 13
|
| Distribution: | Regulation S
|
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