Travelodge, the debt-laden budget hotel group, has staved off collapse with a radical financial restructuring that will see more than £700m of loans written off.
The 505-site chain – acquired by Dubai International Capital (DIC) in a deal worth £675m deal in 2006 – has also proposed to creditors a controversial insolvency procedure to slash its rental bill and offload nearly 50 under-performing hotels.
Under the debt restructuring, the investment bank Goldman Sachs and two hedge funds – Avenue Capital and GoldenTree Asset Management – have replaced DIC as the owners of Travelodge. Of the chain's bank debt of £635m, £233m has been written off and £71m has been repaid.
Travelodge delivered profits of £55m last year, but its debt burden had left the chain on the brink of administration. It has asked creditors to back a company voluntary arrangement to reduce rents on 109 hotels .Reuse content