Oyo Withdraws DRHP, To Refile IPO Post Refinancing: Sources

Softbank-backed OYO is gearing up to refile its anticipated IPO after finalizing refinancing plans to raise up to $450 million through the sale of dollar bonds, reports sources. This move comes as Oravel Stays Ltd, OYO's parent company, has prepaid a significant portion of its debt, hinting towards a stronger financial position.

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Oyo Withdraws DRHP, To Refile IPO Post Refinancing
In a strategic decision to improve its financial structure and pave the way for a successful IPO, Oyo has withdrawn its current draft red herring prospectus (DRHP). This step aligns with the company's aim to refile an updated version of the DRHP following its upcoming bond issuance for refinancing purposes.

Refinancing Plans Advancement:
According to insiders, OYO is on the brink of finalizing refinancing arrangements to secure up to $450 million by issuing dollar bonds. JP Morgan is predicted to lead this refinancing endeavor, offering an interest rate estimation of between 9 to 10 percent per annum.

Impact on Financial Statements:
With the imminent refinancing, substantial changes are anticipated in OYO's financial statements. As a consequence, the company has taken the decision to withdraw the current DRHP application with SEBI. This maneuver is necessary to align the filings with the regulator post-refinancing.

Reduction in Debt Burden:
Having previously repurchased 30 percent of its outstanding Term Loan B worth $660 million, Oravel Stays Ltd effectively decreased its remaining loan sum to approximately $450 million. The upcoming refinancing is poised to extend the repayment timeline to five years, offering considerable flexibility to the company.

Financial Benefits of Refinancing:
The bond issuance stemming from the refinancing initiative is projected to lower the effective interest rate on OYO's existing $450 million Term Loan B facility substantially. This move is anticipated to generate annual interest savings of $8-10 million in the initial year, with a subsequent increase to $15-17 million annually. These savings are expected to bolster OYO's net profits significantly.

Potential Equity Round and IPO Revisitation:
Following the debt refinancing, OYO is contemplating an equity round to further reinforce investor confidence ahead of a potential public listing. This strategic move aims to fortify the company's financial robustness and position it favorably in the market for future endeavors.

Conclusion:
As OYO embarks on its journey towards refinancing and revisiting its IPO strategy, the company is poised to emerge stronger and more resilient in the global travel tech landscape. With strategic financial maneuvers and a focus on bolstering investor confidence, OYO is set to chart a path towards sustained growth and success in the industry.