Oyo Hotels is looking to secure up to $450 million through dollar bonds as it aims to replace an existing high-cost loan amid delays in its stock-market debut, Bloomberg reported, citing a person close to the matter.
According to the report, Oravel Stays Ltd, the parent company of Oyo, is in discussions with bankers to raise between $350 million and $450 million to repay its term loan B, which is set to mature in 2026.
Oyo declined to comment on this development.
The refinancing will extend the repayment timeline to five years, with the company aiming to finalize this process by the September quarter.
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It’s worth noting that in 2021, the company secured $660 million in term loan funding from global institutional investors.
Towards the end of last year, OYO finalized payments totaling INR 1,620 Cr (around $195 Mn) to repurchase 30% of its outstanding Term Loan B (TLB). Nonetheless, there is still an outstanding balance of approximately $465 Mn.
Term Loan B is a category of loan extended by financial institutions, commonly utilized by companies for purposes including acquisitions, recapitalizations, or refinancing existing debt.
This comes after weeks of discussions wherein the hotel giant was in talks to secure close to $400 million in a funding round from the Malaysian sovereign wealth fund Khazanah Nasional Berhad.
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It’s worth mentioning that OYO last secured a primary round from Microsoft in 2021, valuing the company at over $9 billion.
The startup has been asserting improvements in its financial health.
It’s noteworthy that in September, its founder and CEO, Ritesh Agarwal, indicated that OYO was on course to declare its first profitable quarter in Q2 of the financial year 2023-24 (FY24).
The startup saw a 34% reduction in its net loss to INR 1,286.5 Cr in FY23 from INR 1,941.5 Cr, with expenses decreasing slightly despite business expansion.
In 2023, OYO downscaled its IPO size from $1.2 billion to $400-$600 million and submitted its DRHP to the Securities and Exchange Board of India (SEBI) via the confidential pre-filing process.
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Last year, OYO saw the departure of several key executives, including Ankit Gupta, OYO’s India CEO, and Mandar Vaidya, the head of OYO Europe.
During that same year, OYO promoted Rakesh Kumar from deputy chief financial officer to chief financial officer, with a focus on driving finance and operational growth.