Debt-laden Travelodge is to shed one in 10 of its hotels in an attempt to secure the long-term future of the UK's second largest budget chain.
The company, which employs 6,000 staff, is hoping to avoid redundancies by finding new operators for 49 of its 505 hotels. It said it had no plans to close any of them.
While it seeks new operators for 10% of its properties it is asking landlords of the hotels to take a 45% rent reduction over the next six months. Travelodge is asking landlords of a further 109 properties to take a 25% cut in rent.
Travelodge does not own any of its properties and the leases for many were agreed before the financial crash in 2008.
Although the company increased its operating profit to £55m last year, it is crippled by the debts acquired in 2006 when it was bought by Dubai International Capital.
In a rescue plan put together by accountancy firm KPMG, the owners will relinquish control of the company to its three main creditors - Goldman Sachs and two American hedge funds Avenue Capital and Golden Tree Asset Management.
The deal will see £75m injected into the company to refurbish, £55m of which has been earmarked to refurbish 175 hotels early next year. As part of the financial restructuring, £235m of bank debt will be written off and £71m will be repaid, reducing its total debt to £329m. The remainder will need to be repaid by 2017.
Grant Hearn, who agreed to step back into the chief executive role in April, taking over from executive chairman Guy Parsons said: "This is a successful brand with millions of customers and the company will emerge in excellent shape from this process."
The rescue needs the support of 75% of creditors, who will vote on the proposals on September 4.
By Linsey McNeill
Monday, August 20, 2012