It was revealed last month that two New York-based hedge funds, Avenue Capital and GoldenTree Asset Management, plus an unknown third party, were negotiating a debt-for-equity swap that would win control from Dubai International Capital (DIC), which bought Travelodge in 2006.
The US investors, who have been long-term buyers of Travelodge’s debt, agreed to underwrite a £60m loan facility to stabilise the company’s finances as it battles with an interest bill of £100m a year.The debt-for-equity swap is expected to be concluded by September. Sources close to the negotiations said Goldman Sachs was responsible for only a very small percentage, leaving Avenue Capital and GoldenTree Asset Management as the dominant partners in the deal.
DIC, the investment arm of Dubai’s sovereign wealth fund, is expected to lose £400m as a result of the debt-for-equity swap.
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