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EU Commission Approves €1.25 Billion To Recapitalise ‘Touristik Union International’

TUI suffered substantial losses due to the coronavirus outbreak and the travel restrictions that Germany and other countries had to impose to limit the spread of the virus

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Transcontinental Times Staff
Transcontinental Times Staffhttps://www.transcontinentaltimes.com
Submissions filed under "Staff" are acredited to their authors at the bottom of the article if any.

BELGIUM. Brussels: The European Commission has signed German plans to contribute up to €1.25 billion to the recapitalisation of TUI AG (Touristik Union International), the parent company of the TUI Group, as part of a wider support package. The measure was approved under the State aid Temporary Framework.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “As many other companies active in the tourism sector, TUI has been hit particularly hard by the coronavirus crisis. With this measure, Germany will contribute up to €1.25 billion to TUI’s recapitalisation and help the company weather the crisis. At the same time, the State will be sufficiently remunerated for the risk taxpayers assume and the support will come with strings attached to limit distortions of competition. I welcome the participation by private investors to the plan, as it limits the need for State aid while contributing to the recovery of TUI.”

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The German recapitalisation measure

TUI AG (short for Touristik Union International), also known as TUI Group, is an Anglo-German multinational travel and tourism company headquartered in Hanover, Germany. Through its various subsidiaries, TUI operates hotels, cruise ships, airlines, aircrafts, travel agencies, tour operators and online portals. TUI suffered substantial losses due to the coronavirus outbreak and the travel restrictions that Germany and other countries had to impose to limit the spread of the virus. Despite the liquidity support measures already granted to the company by Germany in March and August 2020 (under the schemes SA.59433, SA.56814 and SA.56863, as amended by SA.58021), the significant drop in travel demand and the measures implemented to limit the spread of the virus continue to deteriorate the financial situation of the group. As a result, TUI is currently facing a risk of default and insolvency.

Read also: Germany Hit By The Second Wave Of COVID-19

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Germany notified to the Commission, under the Temporary Framework, a State recapitalisation of TUI of up to €1.25 billion. The recapitalisation comprises:

  • €420 million silent participation convertible into TUI’s equity; and
  • up to €680 million non-convertible silent participation (€400 million of which will only be provided in case the envisaged €400 million in guarantee measures is not provided by the Länder or the Federal government); and
  • €150 million of convertible warrant bond.

The Commission found that the recapitalisation measure notified by Germany is in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

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