Goldman-backed budget hotel operator Travelodge has reportedly claimed that it will be forced to pursue a company voluntary arrangement (CVA) unless its landlords agree to slash its rent bill.
According to a report by the Financial Times, Travelodge has sent its landlords a letter asking them to waive up to £146 mln (€165 mln) in rent, or it may enter a CVA process which would allow it to cut rents permanently and exit underperforming sites.
The UK government indicated this week that hotels could reopen in July, prolonging closures and a zero-revenue period for another two months.
A previous rent proposal by Travelodge, which is owned by the New York hedge funds Golden Tree Asset Management and Avenue Capital and investment bank Goldman Sachs, was rebuffed by landlords including Secure Income REIT last month.
Travelodge’s annual rent bill stands at £230 mln.
The company’s biggest landlords are meanwhile believed to be working on a new proposal that would allow the hotel operator to defer its March rent bill and 20% each month for the rest of 2020 — or about £73 mln. If Travelodge complies with its lease terms for the next two years, the landlords have agreed to write off the deferred rent at the end of 2021.