Travelodge to write off €300m of bank debt
TRAVELODGE, ONE of the largest budget hotel chains in Britain and Ireland, is to write off £235 million (€300 million) of bank debt as part of a significant financial restructuring.
A spokesman for the company confirmed that there would be no hotel closures or job losses in Ireland as a result of the restructuring.
Travelodge operates 12 hotels on the island of Ireland.
The company will cease to operate 49 hotels, but none of these are located here.
“The company will work closely with the landlords to identify new operators for these hotels, and currently envisages no hotel closures or job losses,” Travelodge said in a statement yesterday.
As part of the restructuring some £55 million will be invested in refurbishing its network of 175 hotels, including those in Ireland.
This refurbishment programme will begin early next year, and will continue until summer 2014.
The company said that it would benefit from rent reductions on 109 hotels, while the maturity date of its overall debt would be extended to 2017. “Travelodge’s debt, interest costs and lease liabilities will be significantly reduced,” chief executive Grant Hearn said in the statement.
“This new, appropriate level will provide greater security for our staff, suppliers, landlords and developers.”
The buyout of Travelodge in 2006 by Dubai International Capital (DIC), the Persian Gulf emirate’s private equity firm, was funded by £600 million of leveraged loans maturing from 2012 to 2017, according to data compiled by Bloomberg.
Hedge funds Avenue Capital Group and GoldenTree Asset Management, which underwrote £60 million of loans to the hotel chain in February, will inject at least £75 million.
DIC wrote off its investment in Travelodge in 2008.
According to the most recent accounts for Smorgs (Ireland) Ltd, the company behind the Travelodge hotels here, it reported a pretax loss of €2.58 million in the 15-month period to the end of March 2011.
The accounts show that a total of 139 people were employed in Ireland in March 2011. – (Additional reporting Bloomberg)