Oyo's loan also features maintenance covenants, which are usually only included for companies that are considered risky by investors.
Oyo Hotels, one of India’s most valuable startups, is offering unusually generous terms to investors as it seeks to raise $600 million in debt, following a fresh surge of coronavirus cases in its home country that decimated travel and undercut its recovery plans.
Oravel Stays Pvt, as the parent company is officially known, is discussing with banks and investors a five-year term loan B at 850 basis points over Libor, higher than the usual guidance given for recently issued term loan Bs in the Asia-Pacific market, according to Bloomberg-compiled data. The interest rate is similar to the 875 basis points over the BBSY benchmark paid by Mission Group BidCo Pty Ltd on a seven-year term loan B signed in June 2020.
Oyo’s loan also features maintenance covenants, which are usually only included for companies that are considered risky by investors. The loan announcement confirms an earlier report by Bloomberg News.
The company is hosting a lender call on May 21 and JPMorgan Chase & Co. is arranging the deal. Commitments for the loan are due by June 2.
Oyo is one of the largest startups in Softbank Group Corp.’s portfolio and its headlong global expansion was backed and fostered by the investor’s billionaire founder, Masayoshi Son. While the startup was most recently valued at $10 billion, its business has been crushed after the rapid spread of the virus hit travel, following operational missteps that soured partnerships with hotel owners.
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