OYO In Discussion With Multiple Organisations Including Apollo For $660 Million Debt Refinance

In 2021, OYO Hotels and Homes Ltd secured $660 million in debt funding from global institutional investors, including Fidelity Investments. The term loan is due in 2026

The source told ABP Live that Ritesh Agarwal-led Oravel Stays Limited is waiting for the right market condition for and public offering. 

Source : Getty

Multiple organisations, including Apollo Global Management Inc., have approached OYO Hotels to refinance its $660 million loan after the company turned profitable, a source familiar with the development, told ABP Live on Thursday. News agency Bloomberg first reported that the online hotel booking firm is in talks with Apollo Global Management Inc. to refinance a $660 million loan which is due in 2026. 

In 2021, OYO Hotels and Homes Ltd secured $660 million in debt funding from global institutional investors, including Fidelity Investments. The Bloomberg report added that OYO's parent company, Oravel Stays Pvt, is seeking an extension of the loan maturity to five years.

"Since our consistent increase in profits, we regularly get approached for cheaper financing options but the Board hasn't approved anything, including prepaying some portion," the OYO Spokesperson told ABP Live. 

The source familiar with the development told ABP Live that organisations are approaching OYO to refinance a $660 million senior secured term loan facility on a cheaper basis. The source mentioned that the company's investor relations team and finance team are currently looking into all available options. 

Notably, OYO's term loan was trading at 101.50 cents on the dollar on Thursday, as per Bloomberg's data.

Earlier, Softbank Group Corp. backed start-up OYO Hotel reported its first-ever profit after tax (PAT) of more than Rs 16 crore for the financial year 2022-23 (FY24) since incorporation in 2012. The company’s revenue from operations during the period stood at Rs 5,463 crore in 2022-23, up by 14 per cent from Rs 4,781 crore in 2021-22.

In May, Fitch Ratings revised its outlook for Oravel Stays Limited's (OYO) to positive from stable, while affirming the ratings at 'B-'. Fitch also affirmed the rating on the $660 million senior secured term loan facility due 2026. 

Fitch said OYO is on track to generate positive EBITDA and cash flow from operations (CFO) sustainably.

"We expect significant growth in its EBITDA in FY24, led by an ongoing demand recovery in the travel and tourism industry, the company's stable gross margins, and reduction in operating costs," the rating agency had said. 

OYO IPO Waiting Right Market Condition 

The source told ABP Live that Oravel Stays Limited is waiting for the right market condition for and public offering. 

In September 2021, OYO submitted a preliminary prospectus for its stock listing in India, with an aim to raise Rs 84.3 billion, with a portion of Rs 330 million designated for debt repayment. Additionally, OYO issued two supplementary addendums to the prospectus in September and November 2022, providing investors with updated information regarding its improved business performance during the first half of the fiscal year 2023.

Subsequently, the Securities and Exchange Board of India (SEBI), requested OYO to include more comprehensive details in the prospectus, particularly pertaining to business risk factors.

"If the company sees the right window it will definitely go with it," the source noted.