Holloway Lodging sells Canadian Travelodge franchise for $21M
Halifax-based Holloway Lodging Corp. has sold its Travelodge franchise business for $21 million.
It owned Travelodge, with about 90 franchise hotels, for less than a year as it was part of its purchase last year of Royal Host Inc.
It paid $157 million in cash and shares last year to take control of Royal Host, which owned all the Canadian franchise business of Travelodge. It sold a Toronto Travelodge in February for $13 million.
Holloway said it expects to record a $6.4-million gain from the sale, which will be used to pay down a loan it took out to pay for Royal Host.
"While the franchise business was a solid asset within Holloway's portfolio, it was not a core asset for us," said Holloway chair Michael Rapps. "The sale of this business will allow management to focus on our core business of owning and operating hotels."
Rapps said the sale helps to unlock value for shareholders.
Holloway did not name the buyer, which will tender $16 million in cash and $5 million in subordinated secured notes.
Holloway owns and operates 35 hotels with 3,967 rooms.
The company has substantial holdings in Western Canada, but in its most recent financial reports, for the last quarter of 2014, it was unwilling to speculate how much impact it would feel from diminished business caused by the slowdown in the oilpatch.
