Oyo, a SoftBank-backed hospitality and travel-tech firm, is reportedly preparing to refile the draft papers for its much-anticipated initial public offering (IPO) as the company finalizes its refinancing plans.
The firm aims to raise as much as $450 million by issuing dollar bonds, with JP Morgan poised to spearhead the refinancing endeavor. According to reports from the news agency PTI, the bonds are projected to bear an annual interest rate of 9-10%.
Continue Exploring: JP Morgan extends INR 200 Crore credit facility to fuel Oyo’s expansion
Oyo has already filed an application to retract its existing draft red herring prospectus (DRHP) with the markets regulator SEBI. The company intends to submit a revised version of the DRHP after finalizing its bond issuance.
“The refinancing process will lead to significant alterations in the company’s financial statements. Consequently, in accordance with current regulations, the company will be required to amend its submissions to the regulator,” stated a source quoted in the report.
Earlier, reports indicated that Oyo intended to raise as much as $450 million through dollar bonds to refinance its high-cost Term Loan B.
Continue Exploring: Oyo Hotels plans $450 Million bond sale for refinancing
Last year, Oyo repaid INR 1,620 crore (approximately $195 million) to buy back 30% of its outstanding Term Loan B (TLB). Nevertheless, approximately $465 million of the TLB remains outstanding.
The company took out the loan in 2021. As per the report, the refinancing will lengthen Oyo’s repayment timeline by five years. Initially, the company was expected to repay the remaining amount of the Term Loan B by 2026.
Term Loan B is a type of loan extended by financial institutions, commonly utilized by companies for diverse purposes such as acquisitions, recapitalizations, or refinancing existing debt.
Established in 2012 by Ritesh Agarwal, Oyo provides a range of accommodations including holiday homes, casino hotels, coworking spaces, budget hotels, and corporate stays. To date, the startup has amassed over $3.5 billion in funding, with investors including Peak XV Partners and Microsoft.
Earlier this year, CEO Agarwal announced that Oyo achieved a second consecutive profitable quarter in Q3 of the financial year 2023-24 (FY24), doubling its profit after tax to INR 30 crore.
Agarwal mentioned that Oyo experienced nearly a 10% year-on-year growth in revenue in Q3 FY24, alongside a 15% reduction in operating costs compared to the corresponding quarter of the previous year.
Last year, the startup submitted its draft red herring document (DRHP) for its initial public offering (IPO) through the confidential route. Additionally, it reduced the IPO size to $400 million to $600 million from the initial INR 8,430 crore ($1.2 billion) it intended to raise when it initially filed the DRHP in 2021.
Continue Exploring: OYO’s parent company Oravel Stays to unveil 13 self-operated upscale hotels under ‘Palette’ brand by year-end
