Mobility unicorn Ola to raise $500 million debt in Term Loan B Deal
- ByTejika Bajaj | November 30, 2021
Mobility unicorn Ola is likely to raise $500 million in debt through Term Loan B (TLB) deal, making it the third startup in the country to raise debt through TLB deal. Other Indian startups that have raised debt through TLB include ed-tech decacorn Byju’s and IPO bound hospitality startup OYO.
Moody’s Investors Service has assigned a B3 rating to the company’s proposed senior secured term loan. Moody’s expects that a high level of spending would be required to support Ola’s growth plans such that the company’s annual cash burn will double to $140 million for at least the next two years.
The mobility startup is likely to utilize the term loan for general corporate purposes. The company has been given a B3 rating due to successful completion of Ola’s term loan transaction as planned which will provide the required liquidity to sustain its operations beyond the next 12 months, as well as execute its growth plans.
The Moody’s note said that a rating upgrade is unlikely over the next 12-18 months, given the company’s loss-making operations and aggressive growth strategy. It added that the ratings will likely face downward pressure if the proposed transaction is delayed or if the funds raised are lower than the company’s target of $500 Mn, in the absence of any alternative funding that shores up liquidity by year-end.
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