Travelodge has today launched a CVA that will allow it to temporarily slash rents.
The launch of the CVA (company voluntary arrangement – an insolvency process used by businesses to shed unprofitable leases and cut rents) follows an ongoing dispute between the budget hotel operator and some of its landlords.
Unlike most CVAs, Travelodge will not shut any of its 564 hotels or permanently cut rents. Instead it plans to pay landlords £230m in rent for the period until December 31 2021, at which point full rents become payable.
Travelodge, which is part owned by Goldman Sachs and has been advised by Deloitte, would inject up to £40m of fresh equity into the company as part of the CVA, which also proposes to secure £100m of debt.
Landlords are also being promised payments equating to a 50% share of any earnings before interest, tax, depreciation and amortisation above £200m during the next three years.