Travelodge looks at options including CVA

Mon, 13 Aug 2012 | ADMINISTRATION

The owners of Travelodge are considering placing the hotels in a CVA arrangement in order to address its £500 million debt pile.

Travelodge is the second largest budget hotel operator in the UK behind Whitbread’s Premier Inn. Although Travelodge saw its profits rise by 20 per cent to £55 million last year it can no longer bear the weight of its substantial debts and increasing interest.

In a CVA the group would be able to brush off about 50 leases from its 513-strong hotel portfolio, after its landlords had refused to agree to new terms.

Goldman Sachs and New York hedge funds Avenue Capital and GoldenTree Asset Management are taking over ownership of Travelodge from Dubai International Capital, which acquired the hotel group in 2006 from private equity firm Permira for £675 million.

The trio are understood to have drafted in KPMG to advise on a restructuring of the company with a focus on how to handle its debts. KPMG recently helped Fitness First to drop about 70 of its UK-based gyms in a debt restructuring process.

An unnamed person told The Times, “If there is a CVA, the hotels involved will probably be transferred to new operators over a period of six to twelve months.”

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