Travelodge agrees deal to cut debts
By Daniel Hunter
Travelodge have announced that they have agreed a deal to substantially cut their debts, and in the process securing their long-term future.
Some £235m of bank debt will be written off, helping to almost halve the total to £329m. The hotel chain has also been given more time to make repayments.
Including in the company voluntary agreement (CVA) is the injection of £75m into the firm by three major investors, as well as Travelodge wanting to find new operators for 49 hotels and pay greatly reduced rents on 109 more.
“The impact of the economic downturn on Travelodge’s business has been compounded by a large debt burden and expensive lease arrangements," Richard Fleming, UK Head of Restructuring at KPMG and proposed 'supervisor' of the CVA, said.
"Today’s CVA proposal is one facet of a wider Travelodge restructuring plan to tackle those leases which are proving unsustainable, the majority of which were agreed during the pre-2008 property peaks. With the support of its lenders, shareholders and landlords, the company will be able to reshape its debt and operational structure to a model more suited to these straitened times. The company needs to secure at least 75% creditor approval for its CVA. ”
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