Oyo Hotels seeks $350-450 million through dollar bonds to replace high-cost loans, focusing on profitability, IPO plans, and strengthening financial resilience with strategic partnerships.
Oyo Hotels, known as Oravel Stays Ltd., is in discussions to raise between $350 million to $450 million through dollar bonds.
The aim is to replace an existing high-cost loan, providing financial flexibility and reducing interest payments.
Oravel Stays Ltd. plans to utilize the funds raised to repay its term loan B, which is due in 2026.
The refinancing initiative is expected to extend the repayment timeline to five years.
The company aims to complete the process in the September quarter, demonstrating its proactive approach to financial management.
In 2021, Oyo borrowed $660 million, with approximately $465 million still outstanding.
Last year, the company, backed by Softbank Group Corp., prepaid a portion of the borrowed amount.
The decision to refinance highlights Oyo's strategic efforts to optimize its debt structure and streamline its financial obligations.
Oyo's move aligns with its broader strategy to reduce interest payments and prioritize profitability.
Achieving financial stability is crucial, especially in light of the delays in its planned stock-market debut.
Founder Ritesh Agarwal has long sought to execute an initial public offering (IPO) for Oyo.
Despite previous discussions with investors like Khazanah Nasional Bhd., the timing for the IPO remains undecided.
Oyo's recent profitability milestone in the September quarter has garnered positive attention.
Fitch Ratings has indicated the possibility of a positive rating action as the company's leverage decreases.
The planned refinancing would necessitate Oyo to refile its draft red herring prospectus for the IPO.
This is due to the material impact on existing disclosures to India’s securities regulator.
Despite the recovery in the travel market, Oyo faces challenges in finalizing its IPO timing.
The company's ability to adapt its financial strategies reflects its resilience and commitment to long-term sustainability.
Oyo's discussions with potential investors, including sovereign wealth funds, underscore its attractiveness to global investors.
Strategic partnerships and investor confidence are integral to Oyo's growth trajectory and market positioning.
By proactively addressing debt obligations and optimizing its capital structure, Oyo aims to strengthen its financial resilience.
The refinancing initiative underscores the company's strategic foresight and commitment to enhancing shareholder value.