One of Britain's biggest budget hotel operators is set to walk away from 49 of its hotels and write off £700 million of its debts under a controversial rescue deal.
Travelodge, which owns more than 500 hotels across the UK, Ireland and Spain and employs more than 6,000 staff, said the deal will secure its long-term future and free it of much of its crippling debt burden.
It wants the landlords of 49 hotels to cut rents by 45% over the next six months while it seeks new operators and is asking for a 25% rent cut for a further 109 sites it wants to keep. Travelodge said there were no current plans to close hotels or make job losses.
As part of a wider financial restructuring, it has agreed that £235 million of bank debt will be written off and £71 million will be repaid, bringing its debt down to £329 million, while a further £476 million of loan notes will also be scrapped.
The rescue plan effectively sees Travelodge seized by its three main lenders - Goldman Sachs and two American hedge funds Avenue Capital and GoldenTree Asset Management - which have taken over ownership from Dubai International Capital, which bought the chain in 2006 in a debt-fuelled deal.
Travelodge has traded well since the financial crisis, but the deal will put its future on a stable footing by strengthening its balance sheet and reducing the interest rate on its debt.
It is understood that Dubai International Capital will lose hundreds of millions of pounds as it relinquishes control.
The plans will also see £75 million of new cash injected into the company, with £55 million being spent on refurbishing 175 of Travelodge's hotels starting early next year.
Travelodge chief executive Grant Hearn said: "This is a successful brand with millions of customers and the company will emerge in excellent shape from this process."
But for the rescue deal to go through, it will need the support of 75% of creditors at a vote on September 4.