The creditors of Travelodge, advised by KPMG Manchester, voted on Tuesday to support the proposed company voluntary arrangement aimed at enabling 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, added: "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."