Guy Parsons Travelodge
BUDGET hotel chain Travelodge has pledged to continue work on its hotel in Tithebarn Street in Liverpool city centre after securing a controversial rescue deal.
The chain is set to walk away from 49 of its hotels and write off £700m of its debts under a company voluntary arrangement (CVA).
Travelodge, which owns more than 500 hotels across the UK, Ireland and Spain and employs more than 6,000 staff, said the deal will secure its long-term future and free it of much of its crippling debt burden.
It wants the landlords of 49 hotels to cut rents by 45% over the next six months while it seeks new operators and is asking for a 25% rent cut for a further 109 sites it wants to keep.
Travelodge said there were no plans to close hotels or make job losses.
It has ten hotels in the Liverpool city region, including one on New Brighton promenade, as well as hotels at Cheshire Oaks and Warrington.
And it said ongoing building work, including work at the former Royal & Sun Alliance building, on the corner of Tithebarn Street and Exchange Street East, would continue.
As part of a wider financial restructuring, Travelodge has agreed that £235m of bank debt will be written off and £71m will be repaid, bringing its debt down to £329m while a further £476m of loan notes will also be scrapped.
The rescue plan effectively sees Travelodge seized by its three main lenders – Goldman Sachs and two American hedge funds Avenue Capital and GoldenTree Asset Management – which have taken over ownership from Dubai International Capital, which bought the chain in 2006 in a debt-fuelled deal.
Travelodge has traded well since the financial crisis, but the deal will put its future on a stable footing by strengthening its balance sheet and reducing the interest rate on its debt.
It is understood that Dubai International Capital will lose hundreds of millions of pounds as it relinquishes control.
The plans will also see £75m of new cash injected into the company.