Member Article

Travelodge creditors approve hotel sales and rent cuts

Hotel operator Travelodge has confirmed its financial restructuring, which will see cuts in rent and 8% of hotels will be transferred to new operators.

97% Travelodge creditors approved a Company Voluntary Arrangement (CVA) submitted by the struggling firm, which proposed a rent reduction for 109 of their hotels, while 49 hotels will be passed on to different operators.

KPMG supervised the agreement between the organisation and its creditors, which can be used to manage unsecured debt or upcoming payments.

Richard Fleming, UK head of restructuring at KPMG said the arrangement would deal with Travelodge’s unsustainable lease burden.

He said: “The approval of the CVA means that £709m of debt will be written off and new equity of £75m provided by the lenders. This will finance a £55m refurbishment programme across 175 of the business’ hotels, a move which will benefit customers and landlords alike. “

Restructuring partner, Brian Green from KPMG, praised landlords’ decision to approve the CVA. He commented: “Following our work on the Fitness First CVA we have listened to the views of landlords and incorporated their feedback into this proposal.

“Travelodge now has the structure and finance it needs to move forward and this is thanks to the ongoing support of its creditors.”

Grant Hearn, chief executive of Travelodge commented: “The financial restructuring, including the CVA, will leave Travelodge in a much stronger position going forward and will ensure a long-term, sustainable future for the business.

“Once this joint process is completed, Travelodge’s debt, interest costs and lease liabilities will be significantly reduced. This new appropriate level will provide greater security for our staff, suppliers, landlords and developers.

“This is a successful brand with millions of customers and the Company will emerge in excellent shape from this process.”

This was posted in Bdaily's Members' News section by Miranda Dobson .