Tui AG (LON: TUI) shares jumped on Thursday as the travel company announced that they were very happy with their Easter travel bookings. Which is, you know, interesting. For the shares at that time were a fraction - a couple of pence and change - above the rights issue price. A long weekend, a price significantly above the right price now, well, gosh, that is a surprise.
Now, it is possible to be cynical and even inappropriately so at times. But when we're dealing with money - or politics - the question is always well, am I being cynical enough? That's the question we need to ask ourselves about this issue here. As we've discussed before Tui has just launched a very large (8 for 3) rights issue and one at a deep discount to the prevailing market price. Well, OK, they need to do this in order to pay back the pandemic aid to the German government. That's fine. Except the ex-rights issue should be, in theory, around the £7.80 mark (if we've got our maths right) and the price was at GBP557.2 pence Which is only pennies above the actual rights price of GBP555 pence. Which means that there's a strong possibility - possibility - of the rights issue failing. Those who may buy those new shares would not, or some would not. Which is what a failed rights issue means. Those having a significant effect on future valuations of the company.
Tui share price from London Stock Exchange.
At which point we get this announcement from Tui: “2023 Easter holidays: Booking momentum remains encouraging, TUI customers prefer sunshine destinations“. Well now, isn't that encouraging? It's repeated in the major papers, The Times: “Tui Group's share price enjoyed a day in the sun yesterday when the travel company reported strong demand for Easter holidays.” and The Guardian: “The package holiday operator Tui Group has enjoyed strong Easter bookings to sunshine destinations”.
At which point Tui shares jump 12% and rise 67 pence. That is, 69 pence above that rights issue price, thereby increasing the chance that shareholders will be willing to take up their rights and buy more stock in the company.
Well, isn't that lovely. Now, it is possible to be too cynical at times. But as we say where money is concerned we always think that the correct question is “Am I being cynical enough?” So?
