Premier Inn owner Whitbread has said closing its hotels and restaurants as part of the coronavirus lockdown “may amount” to technical default of its covenants under its banking arrangements.
The company is in talks with its lenders about waivers where “required or prudent”.
Premier Inn chains in the UK and Germany will be temporarily closed, and spending will be paused on refurbishment, extensions, freehold builds and acquisitions to reduce cash outflows.
It added that it is in discussions with the UK government on offering some of its hotels near hospitals to support frontline key workers.
The company said in an update: “The situation is rapidly changing and at this point it is not possible to predict the full extent of the market downturn and the impact on the business’s revenues.
“Whitbread entered the year with a strong balance sheet and access to significant liquidity. However, given the unprecedented situation, we have taken a number of decisive actions to reduce cash outflows during this period.”
The company said there is “material headroom” on its funding facilities, and that it will pay all rent payments owed this quarter. It is also backed by its freehold property estate.
To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette
