LONDON (Dow Jones)–TUI Travel PLC (TT.LN), Europe’s largest travel operator, Tuesday said it plans to raise GBP490 million to refinance its shareholder loan with parent TUI AG (TUI1.XE) and warned its winter booking volumes remain lower than last year.

Separately, it said it would cancel almost half its orders for Boeing Co.’s (BA) delayed new 787 aircraft.

TUI Travel raised GBP350 million by issuing to international institutional investors senior unsecured convertible bonds due 2014, which will convert into about 7% to 8% of shares on maturity. The conversion price has been set at 349.3 pence per share and carries a 6% coupon.

It also will arrange a further GBP140 million in revolving credit facilities, maturing in June, 2012.

TUI Travel is deferring the final repayment of GBP150 million of the TUI AG loan to April 30, after net debt passes a seasonal peak.

TUI Travel’s existing shareholder loan from TUI AG currently amounts to GBP900 million and is due for repayment by Jan. 15, 2011. TUI AG has agreed to waive in part previous terms that require TUI Travel to repay the loan if new external financing is raised.

TUI AG, which holds a 51.6% stake in TUI Travel, won’t participate in the convertible bond but intends to purchase a sufficient number of TUI Travel’s shares to avoid dilution of voting rights.

TUI Travel expects TUI AG to buy about 2.5% of existing stock.

TUI Travel Chief Executive Peter Long said: “The financing measures announced today allow us to commence repayment of our shareholder loan in a pro-active manner and will also allow us to continue to take advantage of attractive M&A opportunities.”

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Courtesy of The Wall Street Journal

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