Oyo Hotels, backed by Softbank Group Corp, is in talks with Apollo Global Management for a USD 660 million loan refinancing deal, aiming to extend the loan maturity by an additional five years beyond its 2026 deadline.
This move comes in the wake of Oyo’s delayed initial public offering (IPO) and its announcement of its first annual profit. The negotiations, involving Oyo’s parent company, Oravel Stays, carry significant implications for Oyo’s financial outlook.
Media reports reveal that Oyo Hotels currently boasts a market capitalioation of USD 1,103.04 million, with robust revenue growth, notably a remarkable 150.12 per cent increase in the last quarter of 2023.
Negotiations for loan refinancing by Oyo, in which SoftBank owns a substantial 47 per cent stake, have implications for the Japanese conglomerate. The outcome stands to impact SoftBank’s debt management strategies, considering its substantial investment in Oyo.
These loan refinancing discussions hold significant importance for Oyo as it grapples with financial commitments and aims to establish a more secure financial trajectory. This decision could grant Oyo the extra time it needs to handle its debt obligations and potentially enhance its financial position before the original loan maturity date in 2026.
Oyo maintains a healthier cash position compared to its debt, a potentially influential factor in these negotiations. Additionally, Oyo’s robust earnings track record suggests the company can continue its dividend payments, a practice upheld for six consecutive years.
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