Yahoo Finance Travelodge in £140m rent battle with landlords
Travelodge will launch a radical overhaul of its business on Wednesday in a bid to force landlords to swallow rent cuts of more than £140m.
The beleaguered hotel firm is hiring accountant Deloitte to oversee a company voluntary arrangement (CVA) with creditors, marking the latest twist in an acrimonious battle between Travelodge’s hedge fund shareholders and the owners of its hotel sites.
Bosses plan to raise £100m of debt, with shareholders injecting up to £40m more by buying new stock.
Sources said a CVA was the only way to break the impasse, save the business and preserve the jobs of its 10,000 staff.
Owned by US funds GoldenTree and Avenue Capital and Wall Street investment bank Goldman Sachs, Travelodge shut its 564 hotels on March 24 when the lockdown began.
The budget hotel chain - which is led by chief executive Peter Gowers - withheld a quarterly rent bill that was due in March and has since pushed hard for major rent cuts.
Many landlords were infuriated by the move because they feel Travelodge's owners are using Covid to secure more favourable terms and should be injecting more of their own cash into the business.
Property owners are also frustrated by the Government fast-tracking emergency laws that prevent them evicting tenants.
Nick Leslau, who runs listed fund Secure Income Real Estate Investment Trust and is Travelodge's biggest landlord, wrote to Business Secretary Alok Sharma over the weekend to warn him that the legislation could have unintended consequences.
Mr Leslau and Viv Watts, leader of the Travelodge Owners Action Group, have rejected Travelodge’s previous proposals and pledged to oppose a potential CVA.
Spurning the CVA could leave the hotel chain with no choice but to call in administrators.
Mr Watts said he had the backing of about 400 property owners. He has threatened to create a “Travelodge 2.0” by evicting the company and replacing it with a shell organisation backed by private investors.
Travelodge is understood to have sweetened its offer to landlords under the CVA.
Sources said more than 90pc of owners will be given at least 50pc of rent until the end of next year - up from a previous proposal of 38pc. Almost 80 hotels will get their rent in full, but 37 will be given no payments before the end of 2021.
Landlords will be entitled to a 50pc share of any profits above £200m over the next three years. They will also be able to break their leases and forfeit the property within six months of the CVA being agreed.
Travelodge declined to comment.
