Travelodge in rescue deal
Debt-crippled hotel group will not lose any branches across Ireland
Published 05/09/2012 | 08:00
No branches of the hotel chain Travelodge in Ireland are at risk of disposal under new plans to rescue the group from financial difficulties.
There is one Travelodge in Londonderry, another in Belfast and a further five in Dublin. There are also others in Cork, Limerick, Waterford and Galway.
Creditors - including landlords across the UK - have voted in favour of a plan that will see rent payments slashed across more than 100 hotels and 49 hotels offloaded to other operators, none of which are located in the north or south of Ireland.
The company voluntary arrangement (CVA) is designed to allow Travelodge to get out of poorer performing leases while also free itself of a crippling debt burden.
A significant number of the properties are owned by millionaire Nick Leslau's investment vehicle Prestbury, which is understood to have supported the move.
The landlords of a further 109 hotel properties are being asked to accept a 25% cut in rent. The remaining 347 sites will be unaffected.
CVAs are seen as controversial and the British Property Federation (BPF) has called for a review of the arrangements, which it claims leave landlords out of pocket and allow companies to jettison their debts.
Under the new deal, Travelodge will be able to shake off some of the mammoth debts it has inherited from former private equity owners.
Its debt restructuring will involve the write-off of £476m of shareholder loan notes, the repayment of a further £71m of bank loans and the extension of the maturity on the remaining £329m of debt until 2017.
The company's three main lenders - Goldman Sachs and two US hedge funds, Avenue Capital and GoldenTree Asset Management - have already seized control of the chain from Dubai International Capital, which paid £675m for Travelodge in 2006.
They will provide a cash injection of £75m, with £55m being spent on refurbishing 175 of Travelodge's hotels with work planned to start early next year.
Travelodge has traded well since the beginning of the financial crisis, but this deal will put its future on a stable footing by strengthening its balance sheet and reducing the interest rate on its outstanding debt.
The UK's second biggest budget hotel chain behind Premier Inn, Travelodge reported a 20% increase in profits last year to £55m.