Travelodge landlords demand clarity on CVA proposals
A group of Travelodge landlords has demanded further clarity on Travelodge's company voluntary arrangement (CVA) or threatened to "join together in opposition to it".
The Travelodge Owners Action group, which represents the landlords of more than 400 of the group's 580 hotels, said landlords "cannot be expected to accept the provisions… on good faith alone" and is asking Travelodge to disclose the terms on which its shareholders would make funding available to support the company.
Viv Watts, on behalf of the Travelodge Owners Action Group, said: "Next week, the UK savers and investors who own Travelodge hotels have the casting vote on the CVA proposal initiated by Travelodge, which seeks to write-off £144m in rental payments due to landlords over the next 18 months.
"On behalf of these savers and investors, the Travelodge Owners Action Group is seeking detailed clarification on some of the terms of Travelodge's current proposal.
"Travelodge needs to demonstrate that it will honour the options promised to landlords within its proposal. This means committing to clear process going forward, using agreed legal mechanisms. The absence of such a commitment will fundamentally undermine landlords' trust in the options presented. Without this added assurance, landlords stand ready to vote against Travelodge's CVA plans.
"Landlords cannot be expected to accept the provisions in Travelodge's proposal on good faith alone. Our action group is fighting for the protection of many charities, pension funds and local authorities that depend heavily on rental income from Travelodge. Despite this, Travelodge is not prepared to disclose the terms on which its shareholders – three offshore hedge funds – would make funding available to support the company. As a result of this lack of transparency, landlords have no choice but to demand total clarity on key provisions in the CVA proposal or join together in opposition to it.
"If Travelodge is going to have a fighting chance of winning the approval of landlords, they need to provide the detailed information requested. With this information to hand, landlords will be better equipped to make an informed decision and determine which way forward is possible."
Travelodge revealed the details of its CVA proposal earlier this month, seeking a 38% total rent reduction after months of fraught negotiations with its landlords. The group has proposed to pay landlords a total of £230m, approximately 62% of rent due, between April 2020 and the end of 2021, with no proposed hotel closures.
Its 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 >>
Travelodge landlords 'threaten to block rent cuts and establish new operator' >>
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