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Travelodge invites customers with bookings to vote on CVA

08 June 2020 by
Travelodge invites customers with bookings to vote on CVA

Travelodge has invited customers with bookings, and who are therefore creditors, to vote on its Company Voluntary Arrangement (CVA).

The Timesreported the news yesterday, to which a spokesperson for Travelodge responded: "It is standard procedure in any CVA that all unsecured creditors of a company which includes customers that have a future booking can vote if they so wish."

After months of negotiations with its landlords which saw some threaten legal action or eviction, the budget hotel chain put forward its CVA proposals to landlords last week, seeking a 38% reduction in its total rent bill to the end of 2021.

Full rent will be paid for 77 hotels, with 94% of leases being paid at least half of rent due. However, no rent will be paid in relation to 6% of properties that had already been loss-making, although payments will cover fixed charges.

Landlords will be offered the opportunity to offset losses through lease extensions, and those that forego a portion of rent will also receive additional cash payments equating to a 50% share of the group's cumulative, adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) generated in the next three years in excess of £200m.

No closures or permanent rent reductions are proposed, with Travelodge saying the temporary action will secure the future of its 10,000 employees.

The CVA package will also see shareholders put forward a £240m support package comprising the use of more than £100m in reserves, taking on £100m in extra debt and putting in up to £40m in new equity.

The CVA will require the approval of 75% of creditors, with a vote planned for 19 June.

Travelodge reveals details of CVA proposal seeking 38% total rent reduction >>

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