Budget hotel chain Travelodge is fighting to secure its future as it asks landlords to back a vital rescue deal.
Creditors - including a raft of landlords across the UK - will vote on a plan that will see rent payments slashed across more than 100 hotels.
The group, which operates more than 500 hotels across the UK, Ireland and Spain and employs more than 6,000 staff, is proposing a plan to offload 49 hotels to other operators, while the landlords of a further 109 are being asked to accept a 25% cut in rent. The remaining 347 will be unaffected.
The company voluntary arrangement (CVA) is designed to allow Travelodge to exit poorer performing leases while also free itself of a crippling debt burden. But the CVA has to be voted through by 75% of creditors.
CVAs are seen as controversial and the British Property Federation (BPF) has called for a review of the arrangements, which it claims leave landlords out of pocket and allow companies to jettison their debts.
BPF chief executive Liz Peace said in response to the Travelodge plans that "once again landlords are being asked to play a significant part in rescuing a business, and a minority at that who are being asked to take a big hit to keep a far bigger business afloat".
But accountancy firm KPMG, which is organising the CVA, said landlords at affected hotels will see a return of 23.4p in the pound compared with just 0.2p if the company is placed into administration.
Under the deal, Travelodge will be able to shake off some of the mammoth debts it has inherited from former private equity owners. Its debt restructuring will involve the write-off of £476 million of shareholder loan notes, the repayment of a further £71 million of bank loans and the extension of the maturity on the remaining £329 million of debt until 2017.
The company's three main lenders - Goldman Sachs and two US hedge funds, Avenue Capital and GoldenTree Asset Management - have already seized control of the chain from Dubai International Capital, which paid £675 million for Travelodge in 2006. They will provide a cash injection of £75 million, with £55 million being spent on refurbishing 175 of Travelodge's hotels starting early next year.
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.