Monday, August 20, 2012
UK Hotel Chain Travelodge Agrees to Debt Restructuring
Mon., August 20, 2012
UK budget hotel chain Travelodge agreed [to] a 635 million pound ($999.6 million) debt restructuring that will give lenders control of the business but confirms a significant loss for its Dubai owners who bought the company in 2006. The announcement comes after lending sources told Reuters in February that the group's lenders would assume control of Travelodge after it breached loan agreements in 2011. Under the restructuring, debt will be reduced to 329 million pounds from 635 million and new cash totaling 75 million pounds will be injected into the business for major refurbishment work, the company said on Friday. Travelodge owner Dubai International Capital (DIC) - 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.