Travelodge will be breathing a sigh of relief today as creditors have agreed to a rescue plan. The proposed company voluntary arrangement (CVA) will enable the business to restructure its property portfolio and slash rent payments.
“Today’s ‘yes’ vote enables Travelodge to tackle the underlying problem of its unsustainable lease burden, which was weighing down the business,” said Richard Fleming, UK Head of Restructuring at KPMG and ‘supervisor’ of the CVA.
“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’ hotels, a move which will benefit customers and landlords alike.
“Over 75% of creditors had to vote in favour of the CVA to pass the resolution, and over 50% of unconnected creditors had to approve it. Today’s vote saw us secure significantly more than this majority and also importantly the support of the landlords, with 97% of all creditors and 96% of landlords voting in favour of the CVA.”
Travelodge employs around 6,000 staff and operates more than 500 hotels across the UK, Ireland and Spain – the deal will hopefully secure its future.
“We are pleased that landlords have recognised that the CVA will deliver a better return to them and estimate creditors will receive a return of 23.4p in the £1, versus the 0.2p in the £1 they would have received if the business had been forced into administration,” said Brian Green, restructuring partner at KPMG and second proposed ‘supervisor’ of the CVA.
“Travelodge now has the structure and finance it needs to move forward and this is thanks to the ongoing support of its creditors.”
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