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Travelodge set to change ownership

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Travelodge set to change ownership
Low-cost hotel chain Travelodge is looking to change owners as it struggles with debt


Published: 12:57pm, 19th February 2012
Updated: 12:21pm, 20th February 2012

Low-cost hotel chain Travelodge is set to change ownership as it moves close to collapsing under a mountain of debts.

The company, which owns 470 hotels across the UK, Ireland and Spain and employs around 6,000 staff, has six weeks to raise £60 million or it could face administration, The Sunday Times said.

Two American hedge funds, Avenue Capital and Golden Tree Asset Management, are expected to step in with the money needed in return for control of the business, which is currently owned by private equity firm Dubai International Capital (DIC).

Travelodge is thought to be trading well but is struggling to deal with £530 million of debts, accrued during a buyout spree before the financial crisis set in.

Avenue Capital and Golden Tree specialise in taking over struggling businesses by taking ownership in return for writing off debts.

The two firms, which control funds of about 35 billion US dollars (£22 billion) between them, are understood to be planning to stump up the cash to prevent Travelodge from defaulting on its loans - its interest bill alone is £100 million a year.

DIC, which paid £675 million for the firm in 2006, could try to retain its stake in Travelodge, but this is reportedly unlikely.

Travelodge is the latest casualty of takeover debt, with Peacocks, the low-cost fashion chain, falling into administration last month.

Last year, riots in England cost Travelodge £1 million after it received more cancellations than bookings in the two weeks surrounding the mayhem.

Some 81 hotels were in areas caught up in the chaos and although none were forced to shut, many received high levels of cancellations, particularly in London.

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