OYO, a major player in the hospitality industry, is said to be strategizing to proactively settle approximately one-third of its outstanding Term Loan B (TLB) through a debt repurchase initiative.
According to the news agency PTI, OYO intends to disburse INR 1,620 Crore ($195 million) to acquire 30% of its outstanding Term Loan B (TLB). Although the debt repayment is slated for June 2026, it is said that the entire transaction will be financed using funds from the company’s balance sheet and 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 began on November 14 and will continue until November 18. If the bids exceed the specified amount, OYO will then buy the loan back on a pro-rata basis.
The buyback initiative is anticipated to decrease OYO’s yearly interest obligations by over INR 225 Crore. As of November 13, OYO’s debt instruments are said to have concluded at 90 cents on the dollar.
This follows closely after OYO co-founder and CEO Ritesh Agarwal informed senior executives in an internal email that OYO was on track to announce its first profitable quarter in the second quarter (Q2) of the financial year 2023-24 (FY24), with a profit after tax (PAT) of INR 16 Crore.
Interestingly, just one month ago, the hospitality unicorn headquartered in Delhi-NCR was reportedly negotiating to restructure its $660 million Term Loan B (TLB) with Apollo Management. This loan was secured during the peak of the Covid-19 pandemic in 2021 when the global hospitality industry came to a halt.
Previously, under the leadership of Ritesh Agarwal, the startup declared its operational profitability in FY23, boasting an adjusted EBITDA of INR 277 Crore. Throughout the fiscal year, the hospitality unicorn, preparing for an IPO, managed to reduce its net losses by 34% YoY, amounting to INR 1,286.5 Crore, despite a 14% YoY surge in operating revenue, reaching INR 5,463.9 Crore in FY23.
The company had also highlighted its strong position to attain an adjusted EBITDA of approximately INR 800 Crore in FY24. It is primarily due to this positive transformation that the startup anticipates funding the prepayment of the Term Loan B (TLB).
In the meantime, preparations are in progress for the eagerly anticipated IPO of OYO, marked by the departure of key executives such as OYO’s India CEO Ankit Gupta and the head of OYO Europe, Mandar Vaidya. Simultaneously, significant appointments have been announced amidst a substantial management restructuring within the company.
Amid all this, Agarwal is set to join the upcoming season of Shark Tank India as the newest shark, adding another dimension to his diverse professional engagements.