TUI makes concessions to rescue Hapag sale

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

27 Feb 2009

Germany's TUI will grant special concessions to a group of investors in the sale of its shipping unit Hapag-Lloyd to rescue the deal even though the shipping and tourism group will get less than it had expected. TUI said on Thursday it would keep a bigger than initially planned stake of 43.33 percent in Hapag-Lloyd after the deal closes, now expected sometime between March 16 and 22. To smoothen the transaction and to ensure the future financial stability of its container shipping unit, the company said it was willing to provide additional credits of up to 1 billion euros ($1.27 billion) in total for a limited period of time.
TUI will get 1.6 billion euros in liquidity when Hapag-Lloyd changes hands, 400 million short of what it had expected. The reduction is mainly due to the fact that TUI will keep a larger stake and because Hapag-Lloyd real-estate holdings have not yet been sold.
TUI had planned to keep one-third of Hapag-Lloyd, which despite the changes has kept its 4.45 billion euro enterprise value.
"The main thing is that they (TUI) give up the majority stake and that Hapag gets off their balance sheet," said Nils Machemel, an analyst at BHF-Bank.
TUI AG shares rose as much as 18.5 percent, and closed the day up 13.3 at 4.65 euros, trouncing a 2.8 percent gain in Germany's mid-cap index .MDAXI.
TUI shares had fallen 22 percent in the five days previous. They have fallen more than 40 percent since the beginning of the year.
Thursday's rise was a result of investors, who bet on the stock falling further, buying TUI shares to cover their positions and to limit their losses, traders said. ($1=.7853 Euro)

Source: Reuters