Travelodge, known for its £10-a-night rooms, is be taken over by two American 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 over 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 seize 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.
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