Trouble has duly arrived. Two US hedge funds , with an eye to protecting the value of the junior deb

Travelodge is not the first company from the 2006-07 buyout vintage to find that its highly leveraged balance sheet looks a bad joke in the colder climate flw tour fishing of 2011-12. Even so, the numbers are extraordinary.
The 2010 accounts – the last filed at Companies House – show a business with revenues of £335m and ebitda (earnings before interest, flw tour fishing tax, depreciation and amortisation) of £47.8m. That's clearly a feeble platform on which to attempt to support bank borrowings of almost £500m. flw tour fishing A 10-to-one ratio of bank debt to ebitda is asking for trouble.
That is doubly so when you consider the inflexible nature of Travelodge's main overhead. Those 2010 accounts show an annual rental commitment of £114m with leases having an average life of 25 years and containing upward-only rental reviews.
Trouble has duly arrived. Two US hedge funds , with an eye to protecting the value of the junior debt they own, are now cast as would-be saviours. flw tour fishing GoldenTree Asset Management and Avenue Capital are prepared to underwrite a £60m loan and, probably, take control via a debt-for-equity swap.
Dubai International Capital, which led the £675m highly leveraged purchase of Travelodge in 2006, wrote off its investment as long ago as 2008, so presumably will welcome anybody willing to attempt a financial reconstruction. DIC should count itself lucky to have a couple of volunteers – otherwise the staff might fairly expect it to defuse the over-the-top financial engineering.