Oyo’s Singapore subsidiary secures $204 Mn term loan from SoftBank

Hospitality major Oyo's Singapore subsidiary Oyo Hotels (Singapore) Pte. Ltd has received $204 million from SoftBank’s UK arm SB Investment Holdings (UK), according to regulatory filings in Singapore.

As per the filings, Madison Pacific Trust has been employed as the securities agent on the behalf of Softbank in this transaction. 

The fresh loan facility would help the hotel brand to bolster its operations, which have been hit hard by the Covid-19 pandemic. Importantly, the transaction was planned for 2020 and is being completed now.

The development comes at a time when the budget hotel brand has started recovering from a very low booking rate during the lockdown last year which continues still in many ways. The Gurugram-based company recently claimed that its revenue per available room in January 2021 was 90% of business a year earlier and the gross profit globally is surpassing January 2020 levels.

The filings also showed that Oyo's subsidiary in Singapore, Oyo Hotels (Singapore) Pte Limited, filed a “Deed of the release of Charge” dated 6th March 2021 which outlines that charges have been released on assets of Oyo’s subsidiaries namely Oyo Hotels (Singapore) Pte Ltd, Oravel Stays(Singapore) Pte Ltd, Oyo Vacation Homes UK Limited and Oyo Vacation Homes Cayman after repayment of a loan of $430 million to SB Investment Holdings (UK) Limited.

This essentially means that Oyo has repaid a debt of $430 million to SoftBank’s UK entity. While Oyo didn’t clarify Entrackr’s specific queries on the repayment of the loan, one of its executives on the condition of anonymity said: “This is a past refinancing through a prior loan transaction agreed for execution during the pandemic for strengthening our balance sheet.”

Oyo’s founder Ritesh Agarwal has previously said that the company is making progress in recovering from the Covid-19 fallout and has about $1 billion to fund operations until an initial public offering for which no timeline has been set. 

Besides disrupting Oyo’s operations, the pandemic has also eroded its valuation. The company took a 20% haircut in valuation in 2020 to $8 billion from $10 billion in Nov 2019. The company was valued at $9 billion when it raised Rs 54 crore from Hindustan Media Ventures Ltd in January 2021.

Over the past week, two important developments occurred which seem not to be in favour of the Gurugram-based company. 

On Monday, in a five-year-old legal battle with Zo Rooms, a Supreme Court-appointed arbitrator ordered that Zo Rooms was entitled to claim relief and costs in the case. However, Zo Rooms’ claim of 7% equity in Oyo is yet to be decided as the arbitrator acknowledged that definitive agreements of the deal weren’t executed.

And on Wednesday, the Competition Commission of India directed MakeMyTrip to re-list Oyo’s rivals Treebo and Fab Hotels on its platforms. MakeMyTrip had stopped featuring the properties of these two websites just after it had signed an agreement with Oyo in February of 2018.