The buyback exercise will be fully funded with cash on the balance sheet and from the cash collateral account
OYO will execute the buyback deal at par value via a public bidding process, which will go on till November 18
The buyback exercise is expected to reduce OYO’s annual interest liabilities by more than INR 225 Cr and comes at a time when the company reported its maiden profitable quarter in Q2 FY24
Hospitality giant OYO reportedly plans to prepay nearly a third of its outstanding term loan B (TLB) via a debt buyback process.
As per news agency PTI, OYO plans to make payments to the tune of INR 1,620 Cr ($195 Mn) to repurchase 30% of its outstanding TLB. While the repayment of the debt is scheduled for June 2026, the exercise will reportedly be fully funded with cash on the balance sheet and from the cash collateral account.
As per the report, the travel tech major will execute the buyback deal at par value via a public bidding process, which commenced on November 14 and will go on till November 18. In the event bids breach the stipulated amount, OYO will then buy the loan back on a pro-rata basis.
The buyback exercise is expected to reduce OYO’s annual interest liabilities by more than INR 225 Cr. At the end of November 13, OYO’s debt paper reportedly closed at 90 cents on the dollar.
This comes close on the heels of OYO cofounder and CEO Ritesh Agarwal telling top brass, in an internal email, that OYO was on the way to report its maiden profitable quarter in the second quarter (Q2) of the financial year 2023-24 (FY24) with a profit after tax (PAT) of INR 16 Cr.
Curiously, a month ago, the Delhi NCR-based hospitality unicorn was said to be in talks to refinance its $660 Mn TLB with Apollo Management. The loan was taken at the height of the Covid-19 pandemic in 2021 as the hospitality business came to a standstill the world over.
In the past, the startup led by Ritesh Agarwal publicly announced that it was operationally profitable in FY23, with an adjusted EBITDA of INR 277 Cr. During the fiscal year, the IPO-bound hospitality unicorn slashed its net losses 34% YoY to INR 1,286.5 Cr against a 14% YoY increase in operating revenue to INR 5,463.9 Cr in FY23.
The company had also noted that it was well-placed to achieve an adjusted EBITDA of nearly INR 800 Cr in FY24. It is largely on the back of this turnaround that the startup expects to fund the prepayment of TLB.
Meanwhile, plans are underway for OYO’s much-awaited IPO, which has seen the departure of key executives, including OYO’s India CEO Ankit Gupta and head of OYO Europe Mandar Vaidya. Many key appointments have also been made amid a major management reshuffle at the company.
Amid all this, Agarwal is all set to join Shark Tank India’s upcoming season as the newest shark.