LONDON Feb 20 Dubai International Capital
is likely to hand the keys of British budget hotelier Travelodge
to lenders including Golden Tree Asset Management and Avenue
Capital, which are in talks to provide a new 60 million pound
($95 million) loan, lending sources said on Monday.
DIC, the private equity group backed by state-owned
conglomerate Dubai Holding, is unlikely to stump up any fresh
cash after writing its 400 million pound investment down to
nothing, the sources said.
"DIC is working closely with the company and lenders to
ensure that the right financing structure is in place for the
business going forwards. DIC wrote off this investment in 2008,
so is not facing any further losses on this investment," a
spokeswoman for DIC said.
DIC bought Travelodge, known for its 10 pound-a-night rooms,
from Permira in 2006 for 675 million pounds, backed by loans of
478 million pounds ($755 million).
Travelodge started restructuring discussions with lenders
after breaching its loan covenants in December 2011, investors
Lenders will hold a bank meeting on Tuesday to discuss the
new 60 million pound loan via existing lenders Golden Tree Asset
Management and Avenue Capital.
The new loan will expire in six months. It will rank ahead
of Travelodge's existing 325 million pounds of senior debt and
would be repaid first in the case of insolvency.
The new 60 million pound loan replaces an emergency 10
million pound loan that matures at the end of February and will
be used as working capital to keep the business running.
Golden Tree and Avenue may ask the senior lenders Royal Bank
of Scotland Group, Investec, Barclays and Babson Capital
Management to participate in the new loan, Travelodge said,
after denying risk of bankruptcy on Monday.
Travelodge declined to comment further.