Travelodge Hotels Ltd., Thame, England, is considering a company voluntary agreement that would see it exit up to 50 loss-making hotel leases to trim a £500 million (US$781 million) debt burden.
The proposed company voluntary agreement is part of a larger financial restructuring that Dubai International Capital is negotiating with New York City-based hedge funds Avenue Capital Group and GoldenTree Asset Management as well as investment bank Goldman Sachs.
Dubai International Capital bought the British budget hotel company, known for its £10 (US$15.90) per night guestrooms, for US$1.3 billion in 2006 with credit from two hedge funds. Dubai International Capital could stand to lose up to £400 million (US$634 million) from the debt-for-equity deal because of the amount of debt it took on to purchase Travelodge.
“As part of the ongoing restructuring process, a number of options are being considered. However, no decisions have been taken at this stage,” Travelodge said in a statement to the press.
Travelodge operates 470 hotels primarily in the U.K. with nine in Ireland and four in Spain. The company replaced its CEO in April.