We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedFinancial Planning

Travelodge restructures its debt


The deal however hands control to lenders

Article comments

Travelodge came to an agreement to restructure its debt on Friday but the deal hands lenders majority control of the budget hotel chain.

The restructuring deal however means a significant loss for Dubai owners who bought the chain in 2006

Under the restructuring deal, debt will be reduced to £329 million from £635 million and new cash totalling £75 million will be injected into the business for major refurbishment work, the company said on Friday.

Travelodge owner Dubai International Capital - which had already written down its investment in Travelodge - will hand the keys to mezzanine lenders including GoldenTree Asset Management and Avenue Capital Group.

Travelodge fell victim to the economic downturn, coupled with a large debt burden and expensive lease arrangements. Its adviser KPMG said all existing hotels would remain open though 49 would be sold to other operators.

DIC bought Travelodge, whose promotions include rooms for 10 pounds a night, from private equity firm Permira in 2006 for 675 million pounds, backed by loans of £478 million.

Under the restructuring, the repayment date for the remaining £329 million of debt is extended to 2017 and interest payments are reduced to 0.25 percent over Libor until 2014, to alleviate the burden while the hotelier's properties undergo refurbishment.

Some £55 million will be invested to renovate more than 11,000 rooms and 175 hotels, starting in early 2013 through to summer 2014, the company said.

The group will undergo a company voluntary at the High Court in London to complete the restructuring.

Share:

Comments

Travelodge restructures its debt
Financial Planning

Budget: What business wants

Budget: What business wants

CFOs are keen for the chancellor to avoid any uncertaintymore ..


Sports Direct posts 10.3% rise in quarterly sales

However, row over pay and investments overshadow sterling performancemore ..

Government awards subsidised renewable energy project contracts

Total project valuation for offshore wind and biomass projects stated at £12bnmore ..

Primark owner ABF appoints second woman to its board

The group posted a 1% rise in operating profits thanks mostly to Primark's successmore ..

Stay ahead of the curve

CFOs used to low interest rates ignore working capital optimisation at their perilmore ..

Digital streamlining of travel and expense claims [Part II]

Concur shows CFOs how to make life easier when the auditors come knockingmore ..

Send to a friend

Email this article to a friend or colleague:


PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.



In Depth
Do you have what it takes to become a non-executive?

Do you have what it takes to become a non-executive?

The benefits of board service for CFOs more ..

In Depth
How M&A teams can create value by challenging the CEO

How M&A teams can create value by challenging the CEO

A typical “hold” period of nine to 18 months can generate increased sale value more ..

Advertisement

* *