BUSINESS

Holloway Lodging sells Travelodge franchise business for $21 million

04/01/2015 12:06 EDT | Updated 06/01/2015 05:59 EDT
HALIFAX - Holloway Lodging Corp. (TSX:HLC) has sold its Travelodge franchise business for $21 million.

Holloway chairman Michael Rapps said Wednesday about 90 Travelodge-branded hotels in Canada will continue to operate under the franchise agreements, which have been transferred to a new owner.

He said the buyer was a U.S. private equity company with Canadian partners, but he wouldn't disclose their identity.

Holloway became the Travelodge franchisor in Canada last year when it bought Royal Host Inc.

The company expects to record a $6.4-million gain from the sale, equivalent to 33 cents per share in the first quarter of its 2015 financial year.

It said the franchise operation wasn't core to its business, which is owning and operating hotels.

Under the deal, Holloway will receive $16 million in cash and $5 million in subordinated secured notes. The company said it plans to use the money from the ale to repay a loan used to finance its acquisition of Royal Host.