May 20, 2021 at 04:52PM

The current surge in COVID-19 cases in India is hitting SoftBank-backed Oyo Hotels hard, so the startup is searching for cash. The hotel platform wants to raise $600 million in debt to beef up its bottom line, Bloomberg reported.

The board of the startup’s parent company, Oravel Stays Pvt., has approved a plan for an institutional term loan, a source told Bloomberg. The source was anonymous as the deal is not yet public.

Oyo has had different business relationships with its hotel partners. Originally, Oyo guaranteed hotel partners a minimum monthly payment, but that unraveled once the pandemic hit. Now, Oyo earns a commission on the hotel rooms it books for other companies.

In March, Oyo said it was pulling out of the U.S. and European markets and severing its Latin American partnership.

The unicorn startup, founded in 2013, posted monthly losses of $15 million in 2020 as the worldwide pandemic hit the hospitality, leisure and travel industries like a hurricane. Oyo cut its global workforce of 30,000 by more than 65 percent.

In addition, SoftBank, Oyo’s biggest investor, reduced Oyo’s valuation to $3 billion — $7 billion less than in 2019.

“Growth will be moderate in comparison to what it was earlier,” Ritesh Agarwal, Oyo founder and CEO, told the Financial Times earlier this year.

Late in 2020, Agarwal told employees that the Indian startup had about $1 billion in cash, was recovering from the effects of the pandemic and still looking toward an initial public offering (IPO) of stock.

“Our management’s focus is to make sure that we have a well-designed, IPO-ready company, available for our shareholders and board members to make the right decision,” Agarwal said.

Oyo has never been profitable. However, losses widened in 2019 as the company expanded in China at the urging of SoftBank. Oyo had expanded heavily into China in 2018 and 2019, making that country its second-largest market behind India.

Then came trouble, in the form of the COVID-19 crisis that slammed the travel industry worldwide.

Hotel Platform Oyo, Hit By India’s COVID-19 Surge, Seeks $600 Million …

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