June 19 2013 Latest news:
By annabelle dickson Business writer
Friday, August 17, 2012
Plans for a new hotel in King’s Lynn look set to go ahead after the debt-laden Travelodge chain has agreed an overhaul of the business to secure its financial future - but the landlords of hotels in Norwich, Great Yarmouth and Barton Mills will be asked to take a cut in rent.
Travelodge, which owns more than 500 hotels across the UK, Ireland and Spain and employs more than 6,000 staff, said the deals will secure its long-term future and free it of much of its crippling debt burden.
It wants the landlords of 49 hotels, including one in Ipswich, to cut rents by 45pc over the next six months while it seeks new operators.
It is also asking for a 25pc rent cut for a further 109 sites it wants to keep including the hotels in Norwich Riverside, Acle, near Great Yarmouth and Barton Mills, near Bury St Edmunds.
The planned hotel in Hardwick Road would be developed and proceed to opening.
If creditors vote next month for the deal it will see the hotel group’s £635m debt pile reduced to £329m, with the deadline for the repayment of that balance being extended until 2017.
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 chief executive Grant Hearn said: “This is a successful brand with millions of customers and the company will emerge in excellent shape from this process.”
But the British Property Federation (BPF) called for a review of controversial company voluntary arrangements (CVAs), which leave landlords out of pocket and allow companies to write off debts.
BPF chief executive Liz Peace said: “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 to just 0.2p if the company was to be placed into administration.