By Rebecca Melvin
New York, Sept. 29 - TUI Travel plc priced an upsized £350 million of five-year convertible bonds late Tuesday at par to yield 6% with an initial conversion premium of 33%, according to a news release.
Initially the Regulation S offering was going to be £300 million in size.
The offering priced at the rich end of talk, which was 6% to 6.75% for the coupon and 28% to 33% for the initial conversion premium.
Deutsche Bank, HSBC, RBS Hoare Govett Ltd., Societe Generale Corporate & Investment Banking and UniCredit Group were joint bookrunners. Lazard acted as an independent financial adviser on the transaction.
The senior unsecured bonds are non-callable for three years and provisionally callable thereafter at a price hurdle of 130%. The bonds will have partial dividend protection.
Proceeds will be used to refinance part of the company's £900 million shareholder loan with its parent company, TUI AG.
The financing will also allow TUI Travel to continue its acquisition strategy. TUI Travel has spent about £120 million on 14 acquisitions and joint ventures in the past year and will spend a further £55 million creating the strategic venture in Canada.
Concurrently with the bond issue, the company received commitments from a syndicate of banks to provide additional revolving credit facilities of £140 million, maturing in June 2012, with an interest cost of Libor plus 325 basis points.
Furthermore, TUI is deferring repayment of £150 million of the shareholder loan beyond the 2011 seasonal peak in net debt (April 2011) as part of a rescheduling of repayment.
Application will be made for listing the convertibles on the Official List of the UK 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: | £350 million, upsized from £300 million
|
| Maturity: | Oct. 5, 2014
|
| Bookrunners: | Deutsche Bank, HSBC, RBS Hoare Govett Ltd., Societe Generale Corporate & Investment Banking, UniCredit Group
|
| Concurrent financing: | £140 million revolving credit facility
|
| Coupon: | 6%
|
| Price: | Par, $1,000
|
| Yield: | 6%
|
| Conversion premium: | 33%
|
| Conversion price: | 349.3p
|
| Call protection: | Non-callable for three years, then provisionally callable at a 130% price hurdle
|
| Price talk: | 6%-6.75%, up 28%-33%
|
| Dividend protection: | Yes, partial
|
| Pricing date: | Sept. 29
|
| Settlement date: | Oct. 5
|
| Distribution: | Regulation S
|
| Stock symbol: | London: TT
|
| Stock reference price: | 266p
|
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