After Lufthansa, the German state can now take a larger stake in Tui as another troubled company in the travel industry. The owners of the tourism group, which was badly hit by the corona crisis, agreed with a large majority on Tuesday to a corresponding right to exchange capital contributions for shares.
This paves the way for the German federal government to enter Tui with a total of up to 25 percent plus one share – at this level it would also have a blocking minority and thus a say in other central decisions.
The company had called its owners together for an extraordinary general meeting, which was held online because of the pandemic restrictions. In doing so, the shareholders created the final formal requirements for greater state participation.
EU gave the green light
The EU Commission had previously announced on Monday evening in Brussels that it believes that the framework conditions under competition law for up to 1.25 billion euros in German aid have been met. Specifically, it concerns a silent participation in Tui of 420 million euros, which the state economic stabilization fund (WSF) is now allowed to convert into direct share certificates according to the resolution of the shareholders. The package also includes a convertible bond with a value of 150 million euros, for which the main conditions had already been clarified in late summer.
In addition, there is now a second, albeit non-convertible, silent participation of up to 680 million euros. The exact exhaustion of this last part depends, among other things, on whether the state of Lower Saxony at the Tui headquarters in Hanover agrees to secure a sum of up to 400 million euros with its own guarantee. This is – like the question of state holdings in stock corporations in general – controversial, as was the case with Lufthansa or Commerzbank in the financial crisis after 2008.
Three aid packages worth 4.8 billion euros
In the spring, Tui was the first large German company to be financially supported by the federal government. In total, the group, including private funds, has now been awarded 4.8 billion euros in support as part of three aid packages in order to cushion the slump in sales during the virus crisis. The lion's share is accounted for by loans that are processed through the federally owned development bank KfW or a consortium of several commercial banks.
In addition, the Tui shareholders also launched a capital increase of around EUR 500 million on Tuesday with a large majority. The additional shares are intended to bring additional money into the cash register. The holding company of the Russian billionaire family Mordashov, as the largest owner to date, had already committed itself in advance to fully exercising its subscription rights.
