Image: One of Travelodge's UK budget hotels

UK budget hotel group Travelodge has moved to secure its long-term future after agreeing a financial restructuring, while also initiating a Company Voluntary Arrangement (CVA).

The chain worked with investors GoldenTree Asset Management, Avenue Capital Group and Goldman Sachs to implement the restructuring, which will see £75m injected into the group.

Travelodge's portfolio will receive a £55m investment to refurbish 175 hotels starting early next year, while its debt will be reduced from £635m to £329m - £235m of which is written off.

In conjunction with the restructuring, the CVA - supervised by KPMG - will lead to 49 sites being sold. Most hotels (347) will be unaffected, but 109 will be subject to rent reductions.

Travelodge CEO Grant Hearn said: "The financial restructuring, including the CVA, will leave Travelodge in a much stronger position going forward and will ensure a long-term, sustainable future for the business."

A spokesperson for Avenue Capital Group said: "We believe this financial restructuring, along with the CVA process, will enable Travelodge to emerge as a stronger business."

KPMG UK head of restructuring Richard Fleming added: "The impact of the economic downturn on Travelodge's business has been compounded by a large debt burden and expensive lease arrangements."

Click here for more information about Travelodge's financial restructuring and CVA and click here for more from KPMG on the CVA.