DIC secures £60m funds pipeline for Travelodge

By SCOTT REID
Published on Monday 20 February 2012 00:00

Low-cost hotel chain Travelodge yesterday said it had secured a £60 million line of funding and was trading well following reports that it could change ownership.

A spokesman for owner Dubai International Capital (DIC), the private equity firm, said the medium-term loan facility, which replaces an existing line, had been underwritten by junior lenders including US firms Golden Tree Asset Management and Avenue Capital.

Travelodge was currently assessing if senior lenders, such as Barclays, Investec and Royal Bank of Scotland, also want to participate, the spokesman added. Debt restructuring talks began earlier this year.

Travelodge owns some 470 hotels across the UK, Ireland and Spain and employs about 6,000 staff.

A Sunday newspaper report claimed the chain was struggling to deal with £530m of debts, accrued during a buy-out spree before the financial crisis set in.

Avenue Capital and Golden Tree specialise in taking over struggling businesses by taking ownership in return for writing off debts.

The two firms, which control funds of about $35 billion (£22bn) between them, were said in the report to be planning to stump up the cash to prevent Travelodge from defaulting on its loans.

The spokesman said the hotelier saw its 2011 profit rise 20 per cent to about £55m on revenues up about 16 per cent to some £370m.

Last year, riots in England cost Travelodge £1m after it received more cancellations than bookings in the two weeks surrounding the mayhem.

Some 81 hotels were caught up in the chaos and although none were forced to shut, many received high levels of cancellations, particularly in London.

Logged in as:

Comment here. Start typing your comment here:

Post comment

Please adhere to our Community guidelines

Your view

Please sign in to be able to comment on this story.