SUMMARY
The edtech major might finalise the new debt structure with a 200-250 bps increase in interest rate
BYJU’S raised the TLB in November 2021 at Libor (London Inter-Bank Offered Rate) plus a floating interest rate of 550 bps
As the edtech giant continues to negotiate to restructure its debt, it is looking to raise up to $500 Mn via convertible notes
Edtech decacorn BYJU’S has reportedly offered to increase the interest rate on its $1.2 Bn term loan B (TLB) as the company renegotiates debt-financing arrangements.
According to sources cited by ET, the edtech major might finalise the new debt structure with a 200-250 bps increase in interest rate.
The edtech giant, which has been on a cost-cutting spree recently, raised the TLB in November 2021 at Libor (London Inter-Bank Offered Rate) plus a floating interest rate of 550 bps. BYJU’S is now looking to add to this interest rate, which would take the total floating interest rate to 750-800 bps.
Reportedly, the term loan is due in 2026 and the interest rate change does not imply a default at BYJU’S end. It is being said that Byju Raveendran himself is directly involved in the renegotiation talks.
The decacorn is expected to finalise the new terms over the next two weeks, per current discussions.
The development comes as last December, it was widely reported that the edtech major was looking for more lenient terms on the loan. Days after that, media reports suggested that some creditors asked BYJU’S to repay the loan faster, looking for a profitable exit at the time.
Incidentally, the renegotiation and creditors asking for a quicker payment have been prompted by a delay in posting FY21 financials and the continued delay in posting FY22 financials. It was earlier reported that reporting FY22 financials by September-end was one of the requirements in the TLB agreement.
The edtech major filed its 2020-21 financial statements on September 14, after a delay of 18 months. A similar story is unfolding for its FY22 financials as it has been nearly 12 months since the financial year ended. There are still no clear timelines for FY22 results, which has raised questions among all stakeholders.
As the edtech giant continues to negotiate to restructure its debt, it is looking to raise up to $500 Mn via convertible notes. However, the size of the funding is still subject to change, people aware of the development told ET.
The edtech closed a $250 Mn funding round from existing investors such as Qatar Investment Authority (QIA) in October 2022, during which it had started conversations around raising another $500 Mn.
While BYJU’S continues to look for ways to raise capital, it has yet to hit profitability. The edtech giant reported a loss of INR 4,588 Cr in FY21, up nearly 20X compared to FY20.
Last September, Raveendran told Inc42 that the company would be in a position where BYJU’S, Aakash and Great Learning would start becoming profitable on a standalone basis by the end of FY23. Following that up in December, BYJU’S CEO said it was targeting group profitability in FY23.
