Travelodge to restructure following £350m lost revenue forecast
James ChappleTravelodge has set out plans to restructure the business and protect more than 10,000 jobs across its 564 sites.
The company is seeking a new arrangement with its landlords, which could amount to some £144 million in temporary rent cuts.
Its owners, which include several US funding houses, filed a company voluntary arrangement (CVA) on Wednesday (3 June).
This would allow it to force through its proposed rent cuts if a resolution cannot be reached amicably.
Travelodge is not proposing to close any of its 564 sites, and has vowed to protect thousands of jobs.
It expects to lose around £350 million in revenue this year owing to the coronavirus crisis.
"The Covid-19 outbreak has had a significant impact on the broader UK economy and the hospitality sector in particular," said the company.
"The impact of Covid-19 is also expected to continue into 2021. This unprecedented reduction in revenues continues to significantly affect the short-term performance of the business, which normally generates approximately 70% of its annual profitability from April to September."
Besides saving £144 million in rent, the CVA also seeks another £240 million in shareholder support in the form of a new £60 million credit facility, up to £40 million fresh investment, and permission to utilise a "significant" portion of the business’s £100 million cash reserves, as well as draw down an existing £40 million credit facility.
Creditors will vote on the CVA proposal at a meeting on 19 June.
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