Travelodge has confirmed a financial restricting and deal that will see it lose 49 hotels.
The hotel chain is working with investors GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs to inject £75 million (Us$117m)of new money into the company.
Despite rising profits, Travelodge has been hit with debts, £235m (US$369m) of which will be written off and £71m (US$121m) to be repaid, leaving £329m (US$517m). The majority of the cash injection (£55m/US$86m) will be used to fund refurbishments, due to start in early 2013.
The hotel chain’s statement also confirmed it will lose 49 hotels to other operators although said it envisages no closures or job losses. Some 109 hotels will be subject to a Company Voluntary Arrangement (CVA) to reduce rent by 45%.
Grant Hearn, CEO of Travelodge said the business should “emerge in excellent shape from the process”.
“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,” he added. “Once this joint process is completed, Travelodge’s debt, interest costs and lease liabilities will be significantly reduced.”
