Oyo Hotels Pursues Loan Refinancing with Apollo Amid IPO Delay

Oyo Hotels Pursues Loan Refinancing with Apollo Amid IPO Delay

VoM News Desk | October 5, 2023 | 09:21 PM IST | Breaking News | Follow on Google News

Oyo Hotels Pursues Loan Refinancing with Apollo Amid IPO Delay

Oyo Hotels Pursues Loan Refinancing with Apollo Amid IPO Delay

Oyo Hotels, the former high-flying startup, is engaged in discussions with Apollo Global Management Inc. to refinance a $660 million loan. The company is seeking an extension of the loan maturity to five years, compared to the current 2026 deadline, according to anonymous sources familiar with the matter. A decision on this refinancing deal could be reached as early as next month.

This move to refinance comes in the wake of a delay in Oyo’s initial public offering (IPO) and reflects the company’s effort to manage its debt more effectively. Oravel Stays Pvt, Oyo’s parent company, is determined to secure more time for debt reduction.

Oyo recently achieved a significant milestone by reporting its first-ever annual profit, and Fitch Ratings anticipates further improvements in earnings as the travel industry continues to recover. Oyo made history as the first Indian unicorn to secure debt from foreign institutions, offering favorable terms and maintenance covenants—a common practice among companies perceived as higher risk by investors.

Despite the growing profits and increasing interest in cheaper financing options, Oyo’s board has not yet approved any refinancing or prepayment of the loan. A spokesperson for Oyo stated, “Due to an ‘increase in profits, we regularly get approached for cheaper financing options, but the company’s board hasn’t approved anything, including prepaying some portion.” Apollo Global Management declined to comment on the matter.

It’s worth noting that the refinancing terms have not been finalized at this stage. Oyo’s loan was trading at 101.50 cents on the dollar as of Thursday, according to Bloomberg data.

The prolonged delay in Oyo’s IPO has been an unexpected challenge for the company. Proceeds from the IPO could have been used to reduce debt, but the IPO has faced delays. Oyo’s founder, Ritesh Agarwal, has been working for years to bring the startup to the public market. Softbank, which owns 47% of the company, and Airbnb Inc. are among its key backers. Oyo announced the filing of fresh IPO documents on April 1, 2023, without disclosing the specific amount it sought to raise or other financial details. The company had initially aimed to raise 84.3 billion rupees ($1 billion) in its original IPO attempt in 2021, but global market shifts disrupted those plans

VoM News Desk

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