UK Travelodge creditors, landlords approve debt agreement

Travelodge Hotels Ltd., Thame, England, saw 97% of its creditors and 96% of its landlords approve a company voluntary agreement on Tuesday to restructure its debt.

The deal will see £235 million (US$367 million) in Travelodge’s debt written off and allow the company to cease operating 49 hotels, 8% of its portfolio. Rent at those hotels will be lowered 55% until the properties are sold, while landlords of 109 other Travelodge properties agreed to reduce rent by 25% for three years.

Travelodge’s parent company Dubai International Capital negotiated the deal 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. Travelodge replaced its CEO in April.