Softbank-backed OYO is set to refile its highly anticipated initial public offering (IPO) as the leader in international travel technology approaches completion of refinancing plans to earn up to USD 450 million through the issue of dollar bonds, said PTI in its news report citing sources.
JP Morgan is most likely to be the lead banker for the refinancing through the selling of dollar bonds at an expected interest rate of 9 to 10% annually, according to a PT news article that cited its source.
OYO has already submitted an application to markets regulator SEBI to withdraw its current draft red herring prospectus (DRHP) in advance of the refinancing. Following the bond offering, the company plans to refile a modified version of the DRHP, according to PTI.
The parent company of OYO, Oravel Stays Ltd, prepaid a sizeable portion of its debt in November through a buyback process, totalling ₹1,620 crore. 30% of its USD 660 million outstanding Term Loan B was repurchased as part of the buyback. According to PTI, this move reduced the loan’s outstanding balance to about USD 450 million.
OYO’s financial records would undergo significant modifications as a result of the refinancing, a person with direct knowledge of the company’s IPO prospects told PTI. Therefore, in accordance with current requirements, it will have to update its regulatory filings.
The PTI source claims that it makes no sense to pursue IPO clearance with the existing financials because the refinancing decision is advanced. Therefore, it would be wise to withdraw the present application.
The refinancing will extend the repayment timeline to five years — versus the repayment of the remaining TLB due in 2026 — the source said.
“The refinancing is expected to result in annual interest savings of USD 8-10 million ( ₹66.4-83 crore) in the first year, after accounting for the costs associated with the bond issuance. The company anticipates annual savings of USD 15-17 million ( ₹124.5 -141.1 crore) thereafter, almost all of which would get added to its net profits. Post the debt refinancing, the company is open to contemplating an equity round, to reaffirm investor confidence before a public listing to fortify its financial strength,” the source said.
OYO submitted preliminary papers for an initial public offering (IPO) of ₹8,430 crore to the Securities and Exchange Board of India (Sebi) in September 2021. Due to the volatile market circumstances at the time, the firm had to prepare for a lower value of USD 4-6 billion instead of USD 11 billion, which caused the IPO to be delayed.
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Published: 18 May 2024, 11:29 AM IST
