New Issue: TUI prices €450 million 4.5% exchangeable bonds due 2013, up 30%

By Evan Weinberger

New York, Jan. 10 - TUI AG priced €450 million in 4.5% exchangeable bonds due April 15, 2013. The bonds carry a 30% initial conversion premium and will be exchangeable into shares of TUI Travel plc.

The coupon came in cheaper than talk, which was set at 3.625% to 4.125%. The initial conversion premium came in at the cheap end of talk, which was set at 30% to 35%.

The bonds were priced at par and issued by Nero Finance Ltd., which is based in Jersey.

Deutsche Bank, Citigroup, Dresdner Kleinwort and UniCredit (Bayerische Hypo- and Vereinsbank) are joint bookrunners of the Regulation S transaction.

The exchange price is set at €3.765. The bonds will convert into 119.5 million shares of TUI Travel, representing 10.7% of the company's total share capital.

Nero will transfer the proceeds from the bonds to Deutsche Bank. The bank will then transfer the proceeds to TUI Travel, which will use them to replace existing credit lines and for general corporate purposes.

TUI said it will have the option to settle conversions for cash against redelivery of the shares to TUI, which will ensure TUI's long-term strategy of retaining TUI Travel as part of the group.

TUI Travel will be able to raise debt on a standalone basis following the completion of the financing, an earlier press release said.

TUI is a tourism and shipping group based in Hanover, Germany.

Issuer: TUI AG

Issue: Exchangeable bonds

Amount: €450 million

Maturity: April 15, 2013

Coupon: 4.5%

Price: Par

Yield: 4.5%

Conversion premium: 30%

Conversion price: €3.765

Bookrunners: Deutsche Bank, Citigroup, Dresdner Kleinwort and UniCredit (Bayerische Hypo- and Vereinsbank)

Distribution: Regulation S

Talk: 3.625%-4.125% coupon, 30%-35% initial conversion premium

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