Oyo to use buybacks to payback more than Rs 1,600 crore in debt

15 Nov 2023 , 10:50 AM

The multinational travel technology company Oyo plans to use a repurchase procedure to prepay a sizeable portion of its debt, which totals Rs 1,620 crore. Thirty percent of Oyo’s outstanding Term Loan B (TLB) would be repurchased as part of the buyback plan, the soon-to-be IPO business announced on Bloomberg.

June 2026 is when this debt is expected to be repaid. Cash from the cash collateral account and the balance sheet are used to completely fund the offer.

The action follows the Ritesh Agarwal-led startup’s announcement in the second quarter of 2023–24 that it had made its first profit, with a profit after tax (PAT) of Rs 16 crore.

In the event that the entire offer is successfully repurchased, Oyo’s interest expenses will be significantly reduced by Rs 225 crore annually.

A public bidding mechanism is being used to complete the buyback at par value, and it will be open from November 14 to 18. Oyo will purchase back the loan pro rata if the bid surpasses the predetermined amount.

On November 13, as per trading terminals, Oyo’s debt paper closed at 90 cents per dollar.

Oyo reported operational profitability in FY23 with an adjusted Ebitda of Rs 277 crore in its most recent public filing.

Ritesh Agarwal, the founder of Oyo, earlier told staff members that the company achieved cash flow positivity in the fourth quarter of FY23 and will close the quarter with around Rs 90 crore in excess cash flow.

Additionally, the company projects FY24 adjusted Ebitda of almost Rs 800 crore.

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