Travelodge looks to appease landlords ahead of CVA vote
Travelodge has reportedly “sweetened” its offer to landlords before they vote on the hotel group’s proposed restructuring plan this Friday (19 June).
According to Sky News, the budget hotel chain has now put several concessions on the table in a bid to win their support ahead of the vote.
Earlier reports suggested landlords could reject the proposed restructuring plan, following continued uncertainty around a proposed £40m investment by its shareholders.
According to The Times, the Travelodge Owners Action Group had issued a demand to be provided with more information before voting in favour of a CVA.
Travelodge, however, argued that a restructure was needed in order to save 10,000 jobs and “secure the long term future of the business”.
According to inside sources, the hotel chain has now proposed an increase to the share of profits that would be granted to landlords above a £200m threshold.
The group has also pledged that shareholders would not be able to take money out of the company until landlords had been fully repaid
In addition, it has reportedly promised to make the process of property-owners exercising break clauses in their contracts easier.
Nick Leslau, who leads Travelodge’s biggest landlord, Secure Income, told Sky News: “We have been negotiating hard for the benefit of all property-owners to improve the terms of the CVA and the improvements are reflected in the terms outlined today by the company.
“The landlord-only break clause has certainly been a game-changer and provides those landlords who do not want to continue with Travelodge as their tenant, to take an early surrender.”
He added: “Subject to agreeing the all-important detailed documentation around these new amendments we will be recommending that the Secure Income REIT plc board votes in favour of the CVA this Friday.”
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.”
