“OYO Announces ₹1,620 Crore Debt Prepayment Through Buyback Following Q2 Profit Triumph”
Global travel-tech giant OYO announces a substantial buyback of 30% of its outstanding Term Loan B, amounting to ₹1,620 crore, as part of its debt prepayment strategy. The move follows OYO’s landmark achievement of reporting its first-ever profit in Q2 2023-24. The debt repayment, scheduled for June 2026, is fully funded by OYO’s cash reserves and cash collateral account, signaling a significant reduction in annual interest outgo if successfully executed. The buyback, open for bidding from November 14-18, aims to capitalize on OYO’s positive financial momentum, with founder Ritesh Agarwal revealing the company’s cash flow positivity and expectations of a robust adjusted EBITDA for FY24.
OYO, the global travel-tech powerhouse, is set to embark on a debt prepayment journey through a substantial buyback of ₹1,620 crore, targeting 30% of its outstanding Term Loan B (TLB). The announcement, made on the Bloomberg terminal, unveils a strategic move by the IPO-bound company to alleviate its debt burden and capitalize on its recent financial success.
The buyback initiative is a significant step for OYO, with the repayment of this debt slated for June 2026. The entire offer is meticulously funded through OYO’s robust cash reserves and the cash collateral account, underlining the company’s commitment to reducing its debt obligations and optimizing its financial structure.
This strategic move follows OYO’s recent milestone of achieving its first-ever profit in the second quarter of the fiscal year 2023-24. With a Profit After Tax (PAT) of ₹16 crore, the startup led by Ritesh Agarwal signals a positive financial trajectory, setting the stage for impactful debt management.
If the buyback is successfully executed, OYO stands to benefit significantly, experiencing a substantial reduction in its interest outgo by ₹225 crore annually. The buyback process is structured as a public bidding initiative, open for participation from November 14 to November 18. In the event that the bid surpasses the predefined amount, OYO will proceed with a pro-rata buyback of the outstanding Term Loan B.
OYO’s debt paper closed at 90 cents per dollar on November 13, reflecting positive investor sentiment. The company’s financial disclosures indicate operational profitability achieved in FY23, boasting an adjusted EBITDA of ₹277 crore.
Founder Ritesh Agarwal, in a communication to OYO employees, shared the news of the company turning cash flow positive in the fourth quarter of FY23, concluding the period with nearly ₹90 crore surplus cash flow. The optimistic outlook extends into the future, with OYO projecting an adjusted EBITDA of nearly ₹800 crore for the fiscal year 2023-24.
As OYO combines its successful debt prepayment strategy with its robust financial performance, the company positions itself for sustained growth and resilience in the evolving landscape of the travel and hospitality industry.
Sources By Agencies
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