Travelodge is to offload 49 of its hotels and significantly reduce its debt mountain as part of a deal that sees Goldman Sachs and two hedge funds gain control of the budget hotel chain.

According to reports in The Daily Telegraph, the new owners will take on approximately £330m of the hotels historic £635m bank debt, once £235m is written off and close to £70m is repaid. The outstanding debt is due to be repaid by 2017 after the whole of a £482m eurobond weighing down the hotelier was also written off.

All the hotels trading under the Travelodge brand are on land leased to the company, with KPMG appointed by the US bank, Avenue Capital and GoldenTree Asset Management to negotiate with landlords in settling the huge debts racked up by the hotel provider and reduce the current rental agreements.

Prior to the deal, Travelodge had 500 hotels across the UK, Ireland and Spain and the deal agreed will see £75m ploughed into the company from the new owners - with a large portion going to refurbishing 175 of the hotels still in the company's hands. A Company Voluntary Arrangement (CVA) is also expected to be announced for the business but assurances that no jobs will be lost have been emphasised.

Richard Fleming, UK head of restructuring at KPMG and proposed 'supervisor' of the CVA, said: 'The impact of the economic downturn on Travelodge's business has been compounded by a large debt burden and expensive lease arrangements. Today's CVA proposal is one facet of a wider Travelodge restructuring plan to tackle those leases which are proving unsustainable, the majority of which were agreed during the pre-2008 property peaks. With the support of its lenders, shareholders and landlords, the company will be able to reshape its debt and operational structure to a model more suited to these straitened times. The company needs to secure at least 75% creditor approval for its CVA.'

Brian Green, restructuring partner at KPMG and second proposed supervisor of the CVA, added: 'We are constantly seeking to improve and evolve our CVA structures, based on feedback from the landlord community. Accordingly, we are again including a 'claw back' mechanism for landlords so they can share in the turnaround of the restructured company's future and landlords are also being offered the option of lease extensions. The detailed terms of the CVA reflect those we have advised on since the start of the downturn. No hotels will be closed on day one, nor will there be any redundancies and suppliers will continue to be paid on time and in full.'

Former owners Dubai International Capital are expected to lose close to £400m since their leveraged purchase of Travelodge in 2006 from Permira.