NEW DELHI:
Oyo
is preparing to refile its
IPO
as it nears the completion of its
refinancing
plans, as per sources. The Softbank-backed global travel tech company aims to raise up to $450 million through the sale of dollar bonds, with JP Morgan likely to be the lead banker for the refinancing at an estimated interest rate of 9 to 10% per annum.
Meanwhile, Oyo has already moved its application with markets regulator SEBI to withdraw its current draft red herring prospectus (DRHP).
The company intends to refile an updated version of the
DRHP
, after the
bond issuance
.
Oyo's parent company, Oravel Stays Ltd, in November, prepaid a significant portion of its debt, amounting to Rs 1,620 crore, through a buyback process. This move reduced its outstanding loan amount to around $450 million.
A source involved in IPO plans told news agency PTI, "The refinancing will result in material changes to Oyo's financial statements. Hence as per existing regulations, it will need to revise its filings with the regulator". The source added, "Since the decision for refinancing is at an advanced stage, it doesn't make sense to continue pursuing IPO approval with the current financials. So it's prudent to withdraw the current application."
The refinancing is expected to extend the repayment timeline to five years, as opposed to the repayment of the remaining Term Loan B (TLB) due in 2026.
The bond issuance would significantly lower the current effective interest rate of 14 per cent on its existing $450 million TLB facility.
The source mentioned that the refinancing is expected to result in annual interest savings of $8-10 million (Rs 66.4-83 crore) in the first year, after accounting for the costs associated with the bond issuance, and annual savings of $15-17 million (Rs 124.5 -141.1 crore) thereafter, almost all of which would get added to its net profits.
Following the debt refinancing, the company is open to considering an equity round to reaffirm investor confidence before a public listing.
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