Oyo Hotels Seeks $450 Mn Bond Sale For Refinancing

SUMMARY

As per the report, Oyo’s parent company Oravel Stays Ltd is in talks with bankers for raising $350 Mn-$450 Mn to repay its term loan B, which is due in 2026

The refinancing will extend the repayment timeline to five years. The company aims to finalise this process by September quarter

It is pertinent to note that in 2021, the company raised $660 Mn in term loan funding from global institutional investors

OYO Hotels is planning to secure up to $450 Mn through dollar bonds as it seeks to replace an existing high-cost loan amid delays in its stock-market debut, Bloomberg reported, citing a person close to the matter.

As per the report, Oyo’s parent company Oravel Stays Ltd is in talks with bankers for raising $350 Mn-$450 Mn to repay its term loan B, which is due in 2026.

Oyo has declined to comment on the development.

The refinancing will extend the repayment timeline to five years. The company aims to finalise this process by September quarter.

It is pertinent to note that in 2021, the company raised $660 Mn in term loan funding from global institutional investors.

Late last year, OYO successfully concluded payments amounting to INR 1,620 Cr (approximately $195 Mn) to repurchase 30% of its outstanding Term Loan B (TLB). However, about $465 Mn is still outstanding.

Term Loan B refers to a type of loan provided by financial institutions, typically used by companies for various purposes such as acquisitions, recapitalisations or refinancing existing debt.

This comes weeks after the hotel giant was in talks to raise close to $400 Mn in a funding round from Malaysian sovereign wealth fund Khazanah Nasional Berhad.

It must be noted that OYO last raised a primary round from Microsoft in 2021 at more than $9 Bn valuation.

The startup has also been claiming to have improved its financial health.

Notably in September its founder and CEO Ritesh Agarwal mentioned that OYO was on track to report its first ever profitable quarter in Q2 of the financial year 2023-24 (FY24).

The startup reported a 34% decrease in its net loss to INR 1,286.5 Cr in FY23 from INR 1,941.5 Cr, as expenses declined marginally despite business growth.

In 2023, OYO reduced its IPO size to $400-$600 Mn from $1.2 Bn earlier and filed its DRHP with the Securities and Exchange Board of India (SEBI) through the confidential pre-filing route.

Last year, OYO saw the departure of several key executives, namely, Ankit Gupta, OYO’s India CEO, and Mandar Vaidya, the head of OYO Europe.

In the same year, OYO elevated its deputy chief financial officer Rakesh Kumar to the position of chief financial officer to drive its finance and operational growth.