The Guardian reports that Travelodge, known for its £10-a-night rooms, is to be taken over by two US hedge funds that stand ready to inject some much needed cash and save the budget hotel chain from collapsing into administration.
The debt-laden company, which has more than 470 hotels in Britain, Ireland and Spain, and employs more than 6,000 people, needs to raise £60m to survive. It is owned by Dubai International Capital, a private equity house backed by the Gulf state, which stands to lose up to £400m.
Two New York-based hedge funds, Avenue Capital and GoldenTree Asset Management, which have been creditors to Travelodge since 2006 when DIC bought the business, have pledged to step in with £60m, a Travelodge spokesman said, and intend to take control of the hotelier in return.
They are talking to Travelodge’s main lenders – Investec, Barclays, Royal Bank of Scotland and Babson – about whether they want to be involved in the rescue.
Creditors were forced to inject £10m of emergency cash in recent weeks. It is in the hedge funds’ interest to keep Travelodge afloat because insolvency would wipe them out as the junior lenders…more detail can be seen at The Guardian