The Travelodge Owners Action Group, the majority coalition of landlords leasing properties to the Goldman Sachs-backed budget hotel operator, are pressing for a 'detailed clarification' of terms as the deadline for a company voluntary arrangement (CVA) draws near.
Said Viv Watts, who coordinates the group, representing over 400 Travelodge hotels: '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 £144 mln (€160 mln) in rental payments due to landlords over the next 18 months.
'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.'
The hotel group – which is owned by Goldman Sachs and New York hedge funds Avenue Capital and GoldenTree Asset Management – has requested that rents be cut from 20% to 80% for the next 18 months, and that landlords write off three months of rent from the first half of this year.
The current deadline for advance votes on Travelodge’s CVA proposal is 17 June by 4pm, while the online creditors’ meeting is scheduled for 19 June, with an announcement on whether the CVA proposal has passed expected on the same day.
Watts continued: '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.'
The Action Group chair added that landlords were still reserving the right to pursue other paths. '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,' Watts concluded.
