|Debt write-off for Travelodge.|
Monday, 20th August 2012
Source : HVS International
It has been reported that Goldman Sachs and two New York hedge funds have taken control of budget group Travelodge from Dubai International Capital through a debt for equity swap.
It is rumoured that the group’s new owners are to inject £75 million into the chain. Travelodge is to offload 49 hotels (8% of its estate) and reduce the rent it pays on 190 properties (22% of the estate), as lenders have agreed to write off £720 million of debt; the group will have until 2017 to pay off the remaining £330 million.
Despite its debt, Travelodge’s profit increased by 20% in 2011 and revenue also rose to £370 million; however, the group’s interest payments had reportedly grown to an unsustainable £100 million a year.
The group has said that it will work with the landlords of the 49 hotels to leave the portfolio to identify new operators and it does not expect any closures or job losses.
Commenting on the debt reduction, Grant Hearn, Travelodge’s chief executive, said, “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.”