TUI says Hapag-Lloyd separation going to plan

Hapag-Lloyd parent TUI AG today said the process to separate itself from container shipping is going according to plan and expects to review initial non-binding bids by mid-August.

The German shipping and tourism group said a final evaluation of the different separation options (trade sale, merger or spin-off) would only happen once binding bids have been submitted by the fall.

Only then will the board be able to take a balanced decision with due care and in the interest of all shareholders, the executive board said in a statement.

However, TUI did warn that a spin-off would require a prior repurchase of TUI bonds in excess of 2 billion euros, which it said will weaken the credit standing of the two companies emerging from the transaction.

The spin-off would also necessitate a refinancing of the two groups that would be practically impossible to implement without an injection of new capital (a share issue). From today's perspective, a spin-off would destroy value and would thus not be in the interest of shareholders. Moreover, a spin-off would require a 75 percent majority of votes at a general meeting, TUI said.

TUI added that a demand from a shareholder group to be included in the decision making over the separation process of Hapag-Lloyd is premature.

It goes without saying that TUI AG will ask its shareholders for their consent in due time should this be required by statutory law.

Source: American Shipper