Dhe EU Commission has approved German state aid of up to 1.25 billion euros for the travel group TUI, which has been hard hit by the Corona crisis. The authority announced on Monday evening in Brussels. The German state aid is “necessary, suitable and appropriate” in order to remedy a “considerable disruption in the economic life of a member state”, said the EU Commission Vice-President Margrethe Vestager. The state will “receive adequate remuneration for the risk borne by taxpayers and combine the support with conditions in order to limit possible distortions of competition.”
According to the EU Commission, the 1.25 billion euros of the federal government include a silent participation of 420 million euros, which can be converted into TUI’s equity. The package also includes a non-convertible silent participation of up to 680 million euros and a convertible bond with warrants of 150 million euros.
Special permit for private investors
The state aid for the world’s largest travel company TUI is part of a larger rescue package in which private investors are also involved. One of them is the Russian major shareholder Alexej Mordaschow, who is now allowed to increase its stake from 24.9 to up to 36 percent, as was also announced on Monday. The financial regulator Bafin released him from a mandatory offer to the other TUI shareholders, which would normally be due if the 30 percent threshold was exceeded. The Russian made the exemption a condition that he would subscribe to new TUI shares for up to 266 million euros in the upcoming capital increase.
TUI shareholders will vote on Tuesday at the Annual General Meeting on the financial package with which the Hanover-based company is to receive a total of 1.8 billion euros to survive the corona crisis. The state rescue fund WSF contributes the lion’s share.
TUI’s business largely collapsed due to the travel restrictions and bans in the corona pandemic. In the 2019/20 financial year alone (until the end of September) TUI generated a loss of 3.1 billion euros. CEO Fritz Joussen hopes for normalization by the summer. After Lufthansa, which is being saved from bankruptcy with 9 billion euros in government aid from Germany, Switzerland, Austria and Belgium, TUI is the second major German crisis in the pandemic.