By Rebecca Melvin
New York, April 20 - TUI Travel plc launched and priced an upsized £400 million of seven-year senior unsecured convertible bonds on Tuesday at par to yield 4.9% with an initial conversion premium of 33%, according to a news release.
Initially the deal was going to be £350 million in size, with an option to increase the issue by £50 million.
The Regulation S issue priced toward the rich end of talk for the coupon, which was 4.75% to 5.5%, and near the midpoint of talk for the premium, which was 30% to 35%.
TUI Travel has also received commitments for additional revolving credit facilities of £150 million. The interest cost on the facilities is Libor plus 275 basis points on drawn amounts. Available revolving credit facilities now total £1.06 billion.
TUI priced £350 million of 6% convertibles due 2014 in October 2009.
The new bonds are non-callable for four years and then are provisionally callable at a 130% price hurdle. There is an investor put after 5.5 years. There is partial dividend protection.
The conversion price has been set at 382.34p per share.
Proceeds will be used along with other financing to enable TUI to exploit attractive acquisition opportunities, to extend and diversify its debt maturity profile, to broaden its sources of finance and to reduce the need to refinance existing bank facilities due June 2012.
Deutsche Bank AG, London Branch, RBS Hoare Govett Ltd., Barclays Bank plc, Citigroup Global Markets Ltd., Commerzbank AG and ING Bank NV were joint bookrunners of the offering.
TUI AG, the group's majority shareholder, controlling 54.9% of outstanding issued shares, said it would subscribe for 50% of the bonds to prevent potential dilution of its majority shareholding. TUI AG also intends to convert the bonds at the same time, and in the same proportion, as any third-party conversions to prevent dilution. It has also agreed to waive its right to be offered new shares to protect it from the potential dilution of its shareholdings.
The bond offering is expected to close April 27 and is expected to be listed on the Official List of the U.K. Listing Authority and admitted to trading on the Professional Securities Market of the London Stock Exchange.
TUI is a tour operator and part of TUI AG, based in Hanover, Germany.
| Issuer: | TUI Travel plc
|
| Issue: | Convertible senior unsecured bonds
|
| Amount: | £400 million, upsized from £350 million
|
| Maturity: | April 2017
|
| Bookrunners: | Deutsche Bank AG, RBS Hoare Govett Ltd., Barclays Bank plc, Citigroup Global Markets Ltd., Commerzbank AG and ING Bank NV
|
| Concurrent financing: | £150 million revolving credit facility
|
| Coupon: | 4.9%
|
| Price: | Par
|
| Yield: | 4.9%
|
| Conversion premium: | 33%
|
| Conversion price: | 382.34p
|
| Call protection: | Non-callable for four years, then provisionally callable at 130% price hurdle
|
| Put: | In 5.5 years
|
| Price talk: | 4.75%-5.5%, up 30%-35%
|
| Dividend protection: | Yes, partial
|
| Pricing date: | April 20
|
| Settlement date: | April 27
|
| Distribution: | Regulation S
|
| Stock symbol: | London: TT
|
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