The future ownership of Travelodge, the UK budget hotel chain, is hanging in the balance
Travelodge ownership hangs in balance
The future of Dubai International Capital's (DIC's) ownership of the budget chain Travelodge hung in the balance last night amid speculation that two New York hedge funds are trying to prise the company away from the Dubai firm.
The hotel chain, based in the UK, has been undergoing a debt restructure. Reports out of the UK have stated that the hedge funds GoldenTree Asset Management and Avenue Capital, which have underwritten a loan facility of £60 million (Dh349.5m), are set to take control of the hotel chain.
DIC's response suggested it was only certain that it retained ownership for now, which raises questions about changes that may take place in future.
"DIC wrote off its investment in Travelodge in 2008 so it is not facing any further losses on this," the DIC said.
"DIC remains a supportive owner of Travelodge and is working closely with the company and lenders to ensure that the right financing structure is in place for the business going forwards."
The Dubai firm said the financing "fully funds Travelodge and allows it to meet its current obligations".
These latest developments come as some major Dubai companies, including DIC, continue to work through heavy debts.
DIC in November reached an agreement with creditors on the terms of a US$2.4 billion (Dh8.81bn) debt restructuring.
The firm made a series of sales last year, including offloading Oger Telecom in August.
DIC also sold its minority stake in Landis+Gyr to Toshiba in May. In June, DIC announced that it had completed its sale of a 45 per cent stake in KEF Holdings, a UAE manufacturer of valves and steel castings, to Tyco International for $178 million, which represented a return on the $126m it acquired it for in September 2008.
DIC bought Travelodge for £675m in 2006 from Permira Funds in a deal that was highly leveraged.
Travelodge, which has 499 hotels, has said that trading is continuing as normal and that it is on track to open the 41 hotels it announced at the start of this year.