Oyo Hotels, a once high-flying startup, is reportedly in talks with Apollo Global Management Inc. to refinance a $660 million loan. The move comes as the company seeks more time to reduce its debt following a delay in its initial public offering (IPO).
Oravel Stays Pvt, Oyo’s parent company, is looking to extend the maturity of the loan to five years, compared to the existing 2026 deadline. The decision could be reached as early as next month, according to sources who wished to remain anonymous due to the private nature of the negotiations.
The discussions with Apollo come after Oyo, backed by Softbank Group Corp., reported its first-ever annual profit. Fitch Ratings sees earnings improving as travel recovers. Oyo was the first Indian unicorn to raise debt from foreign institutions and had offered generous terms and maintenance covenants, a usual practice by firms deemed risky by investors.
“Due to an increase in profits, we regularly get approached for cheaper financing options, but the company’s board hasn’t approved anything, including prepaying some portion,” a spokesperson for Oyo said in an email. A representative for Apollo declined to comment.
There is no final decision on the refinancing terms yet. Oyo’s loan traded at 101.50 cents on the dollar on Thursday. The delay in Oyo’s IPO has been longer than expected. The proceeds from the IPO could have helped the company reduce its debt instead of seeking refinancing.The firm’s founder, Ritesh Agarwal, has been trying for years to push through an IPO for the startup, which is 47% owned by Softbank.
The startup had announced filing of fresh documents for the IPO on April 1, without disclosing the amount it was seeking or other financial details. Oyo — once valued around $10 billion and seen as India’s Airbnb-equivalent — had filed to raise 84.3 billion rupees ($1 billion) in its original effort to go public in 2021 before technology valuations plunged and affected startups worldwide.
