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Travelodge landlords may reportedly reject the hotel chain’s restructuring plan this week, following continued uncertainty around a proposed £40m investment by its owners.
According to The Times, the Travelodge Owners Action Group has issued a demand to be provided with more information about the proposed investment before deciding their vote in a meeting this Friday (19 June).
It comes as the budget hotel chain warned that a rejection of its proposed company voluntary arrangements (CVA) would see the group “likely to enter into administration or liquidation”, the Times said.
The proposed CVA would seek to cut its rent by more than a third, while Goldman Sachs, Avenue Capital and Golden Tree would provide the group with £60m in credit.
In addition, owners of the budget hotel chain have announced plans to invest up to £40m of new equity into the group.
The Travelodge Owners Action Group, which represents a coalition of landlords across 400 sites, has argued that the proposed injection is subject to conditions that they have not been briefed on.
Reports also suggest the coalition is calling on the hotel chain to “demonstrate that it would honour commitments under the proposed restructuring”.
Travelodge declined to comment on the proposed rejection of its restructuring plans.
The hotel chain first revealed its plans to launch a CVA earlier this month.
At the time, a Travelodge insider told Sky News that the restructuring proposal was “not a traditional CVA”, as it would result in no site closures. In addition, they said that all 564 sites would revert to their full rent agreements from the end of next year.
A spokesperson told Hotel Owner: “Travelodge has been an extremely successful business and it has suddenly been faced with a very difficult situation.
“The proposal does ask for some big injections of cash by shareholders and substantial temporary rent reductions from landlords – but it is fair and will help the company get through the crisis, which is in everyone’s interests.”
They added that the move was needed in order to save 10,000 jobs and “secure the long term future of the business”.
