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Travelodge Enters CVA and Agrees Debt-for-Equity Swap

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Published on 20/08/12 - Updated on 17/03/22

Travelodge has been passed over to two New York hedge funds after a debt-for-equity swap. The chain is to scrap 49 hotels as part of a CVA which sees its debts reduced to under £330m, and is negotiating rent reductions with landlords of 109 further hotels.

Following a debt-for-equity swap, New York hedge funds Avenue Capital Group and GoldenTree Asset Management have taken control of UK hotel chain Travelodge from Dubai International Capital (DIC). The company was struggling to deal with its debt burden, which had mounted to £635m.As part of the restructuring, Travelodge has also agreed to a Company Voluntary Agreement (CVA), and will sell 49 of its 500 hotels, as KPMG negotiates rent reductions in a further 109 hotels. £235 million of bank loans to be written off and £71m repaid, reducing Travelodge’s debt burden to £329m. This is to be repaid by 2017. The new owners, associated with Goldman Sachs, will inject £75 million into the chain, £55m of which will be used to carry out refurbishments. The company expects no hotel closures or job losses as a result of the restructuring.DIC, which in 2006 acquired the chain from Permira in a highly leveraged £675m deal, has made a loss of £400m. Despite the recession, Travelodge managed to maintain positive financial results, with profits up 20% to £55 million last year and revenues of £370m (up 16%).

Travelodge

Travelodge

Hotel Group

  • Travelodge United Kingdom
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