After refinancing, OYO will remove the DRHP and refile its eagerly expected IPO.

According to insiders, OYO, a major participant in the travel technology industry, is close to finalizing its refinancing plans to raise up to $450 million through the issue of dollar bonds. Softbank is backing OYO in this much-awaited IPO.According to a source, JP Morgan is most likely to be the lead lender for the refinancing through the selling of dollar bonds at an estimated interest rate of 9 to 10% annually.OYO has already submitted an application to markets regulator Sebi to withdraw its current draft red herring prospectus (DRHP) in advance of the refinancing. Following the bond issuance, the company plans to refile an amended version of the DRHP.The parent business of OYO, Oravel Stays Ltd., paid off a sizeable portion of its debt in November through a repurchase process, totaling Rs 1,620 crore. Repurchasing thirty percent of its $660 million outstanding Term Loan B was part of the repurchase. Its outstanding loan balance was reduced to about $450 million as a result of the transaction."There will be material changes to OYO's financial statements as a result of the refinancing," a source with inside knowledge of the company's IPO prospects told PTI. It will therefore need to update its files with the regulator in accordance with current regulations.

""With the current financials, it doesn't make sense to pursue IPO approval further as the refinancing decision is advanced." Thus, it makes sense to withdraw the application as it stands," he continued.According to the source, the refinancing will lengthen the payback period to five years as opposed to the remaining TLB's 2026 repayment deadline.The present effective interest rate of 14% on its $450 million Term Loan B (TLB) facility would be considerably reduced by the bond offering.After deducting the bond issuing expenses, the refinancing is anticipated to save $8–10 million (about Rs. 66.4–83 crore) in interest during the first year. After that, the company expects to save $15–17 million (about Rs 124.5–141.1 crore) a year, nearly all of which will be added to net earnings. The company is willing to consider an equity round after the debt refinancing in order to reassure investors and strengthen its financial position prior to going public," the person stated.OYO submitted preliminary documentation for an initial public offering (IPO) of Rs 8,430 crore to the Securities and Exchange Board of India (Sebi) in September 2021. Due to the unstable market conditions at the time, the business had to prepare for a lower valuation of approximately $4-6 billion instead of the $11 billion it had originally targeted, delaying the IPO launch.