UK budget hotel chain Travelodge has been given the green light to close 49 properties. The move is part of a financial restructuring which will also see the group invest £55 million into refurbishing 175 hotels.
The Company Voluntary Arrangement (CVA) that was launched on August 17th was approved yesterday, as 97% of Travelodge creditors, including 96% of landlords, voted in favour of the arrangement.
The new development will enable the business to restructure its portfolio which will result in rent reductions with landlords at more than a fifth of its 500 properties.
A further 49 hotels will be sold over the next six months.
Richard Fleming, UK head of restructuring at KPMG and supervisor of the CVA, said “The approval of the CVA also means that £709m of debt will be written off and new equity of £75m provided by the lenders.
“This will finance a £55m refurbishment programme across 175 of the business’s hotels, a move which will benefit customers and landlords alike.”
“The financial restructuring, including the CVA, will leave Travelodge in a much stronger position going forward and will ensure a long-term, sustainable future for the business.” explained Grant Hearn, CEO.
“Once this joint process is completed, Travelodge’s debt, interest costs and lease liabilities will be significantly reduced.”
The refurbishment programme is set to commence in early 2013 and continue through to summer 2014.