OYO To Refile IPO Papers After $450 Mn Refinancing For Term Loan B

SoftBank-backed OYO is reportedly preparing to refile the draft papers for its much-anticipated initial public offering (IPO), as the travel tech company is close to finalising its refinancing plans.

The company is looking to raise up to $450 Mn through the sale of dollar bonds, with JP Morgan expected to lead the refinancing effort. The bonds are anticipated to carry an interest rate of 9-10% per annum, news agency PTI reported.

OYO has already submitted an application to withdraw its current draft red herring prospectus (DRHP) with the markets regulator SEBI. The company plans to refile an updated version of the DRHP following the completion of its bond issuance.

“The refinancing will result in material changes to OYO’s financial statements. Hence, as per existing regulations, it will need to revise its filings with the regulator,” the report quoted a source as saying.

Company sources confirmed the developments with Inc42.

Earlier, it was reported that OYO was planning to secure up to $450 Mn through dollar bonds to refinance its high-cost Term Loan B. 

Last year, OYO repaid INR 1,620 Cr (approximately $195 Mn) to repurchase 30% of its outstanding Term Loan B (TLB). However, around $465 Mn remains outstanding.

The company took the loan in 2021. The report said that the refinancing will extend the repayment timeline for OYO by five years. The company was to repay the remaining amount of the Term Loan B in 2026.

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

Founded in 2012 by Ritesh Agarwal, OYO offers holiday homes, casino hotels, coworking spaces, budget hotels, corporate stays, and more. The startup has raised over $3.5 Bn in funding till date and counts the likes of Peak XV Partners and Microsoft among its investors.

Earlier this year, CEO Agarwal said that OYO posted a second consecutive profitable quarter in Q3 of financial year 2023-24 (FY24), doubling its profit after tax to INR 30 Cr. 

Agarwal said OYO’s revenue grew nearly 10% year-on-year in Q3 FY24, while it also “optimised its operating cost” by 15% compared to the year-ago quarter. 

The SoftBank-backed startup filed its draft red herring document (DRHP) for its initial public offering (IPO) via confidential route last year. It also slashed the IPO size to $400 Mn-$600 Mn from INR 8,430 Cr ($1.2 Bn) it planned to raise when it first filed the DRHP in 2021.