The creditors of Travelodge have today voted overwhelmingly through the proposed company voluntary arrangement (CVA), which will enable the business to restructure its property portfolio.
Richard Fleming, UK Head of Restructuring at KPMG and ‘supervisor’ of the CVA, said: “Today’s ‘yes’ vote enables Travelodge to tackle the underlying problem of its unsustainable lease burden, which was weighing down the business. The approval of the CVA also means that £709m of debt will be written off and new equity of £75m provided by the lenders. This will finance a £55m refurbishment programme across 175 of the business’ hotels, a move which will benefit customers and landlords alike.
“Over 75% of creditors had to vote in favour of the CVA to pass the resolution, and over 50% of unconnected creditors had to approve it. Today’s vote saw us secure significantly more than this majority and also importantly the support of the landlords, with 97% of all creditors and 96% of landlords voting in favour of the CVA.”
Brian Green, restructuring partner at KPMG and second proposed ‘supervisor’ of the CVA commented: “We are pleased that landlords have recognised that the CVA will deliver a better return to them and estimate creditors will receive a return of 23.4p in the £1, versus the 0.2p in the £1 they would have received if the business had been forced into administration.
“Following our work on the Fitness First CVA we have listened to the views of landlords and incorporated their feedback into this proposal. This includes a claw-back clause, to enable landlords to share in the turnaround of the business, and the assurance that the company will pay the business rates on the affected properties until replacement occupiers are found. We are also offering landlords the option to extend their lease terms, which has not been offered in a CVA before and is an addition designed to offer as much value to landlords as possible.
“Travelodge now has the structure and finance it needs to move forward and this is thanks to the ongoing support of its creditors.”
For further information on the CVA, please contact
Katy Broomhead, PR manager at KPMG: 0161 246 4623 / 07824 537963
Zoe Sheppard, PR manager, KPMG: 0117 905 4337/ 07770 737994
KPMG Press Office: 020 7694 8773
For further information on Travelodge, please contact:
James Leviton / Clare Dundas
Tel: 020 7251 3801
About company voluntary arrangements (CVAs)
Where a company is experiencing difficulties in paying its debts, the directors can propose a company voluntary arrangement (CVA) whereby the company enters into a legally binding agreement with its creditors, such as their suppliers or landlords. In a similar vein to an individual voluntary arrangement (IVA), which gives an individual an alternative to bankruptcy, a CVA enables a company and its creditors to come to a compromise agreement and avoid an administration or liquidation. A CVA can provide a company with some breathing space to allow it to reorganise or restructure its funding and/or its operations with as little disruption to the day to day trading as possible, with the control of the company usually staying within the existing management.
The first budget hotel brand to launch in the UK in 1985, Over 13 million people stayed with Travelodge last year and 90% of reservations are currently made online at www.travelodge.co.uk, where room rates start at £19 per night.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.