BYJU’S Creditors End Negotiations To Restructure Its $1.2 Bn Loan

SUMMARY

The talks were reportedly called off after the creditors moved to court accusing BYJU’S of hiding $500 Mn of funds raised

BYJU’S raised $1.2 Bn term loan B in 2021 and was in negotiations with the creditors to restructure the loan

Recently, some creditors filed a lawsuit in the US, accusing BYJU’S Alpha of hiding about $500 Mn

In another setback to edtech unicorn BYJU’S, its creditors have reportedly pulled out of the negotiations with the startup to restructure its loan worth $1.2 Bn.

People aware of the matter told Bloomberg that the talks were called off after the creditors moved to court accusing BYJU’S of hiding $500 Mn of funds raised. The lenders can reportedly sell the firm’s term loan B (TLB) securities now as the restraint that came as part of the negotiations has been lifted.

It must be noted that some creditors of BYJU’S, in a court in the US, accused BYJU’S Alpha, a US-based non-operative entity of the edtech company, of hiding about $500 Mn. However, BYJU’S rejected the allegations and said that the transfer of $500 Mn from BYJU’S Alpha didn’t contravene any terms of the credit agreement and the agreed-upon rights and responsibilities.

The edtech unicorn raised the TLB of $1.2 Bn in 2021. However, as the unicorn began renegotiations for the terms of the debt, the creditors asked it to immediately repay a part of the loan. Recently, the lenders also sought a prepayment of $200 Mn, along with a higher interest rate, as a precondition to restructure the TLB.

As per the Bloomberg report, BYJU’S is trying to reach out to all lenders independently to renegotiate the terms despite the creditors discontinuing the talks.

Meanwhile, BYJU’s needs to make an interest payment on the loan by June 5, people aware of the matter told the publication. On the other hand, BYJU’S lawyer said in a US court last month that it would get “a large capital infusion” soon, which would allow it to pay down the loan.

Last month, the edtech startup raised a debt funding of $250 Mn from the US-based alternative investment firm Davidson Kempner. As per reports, the company was also close to raising another $700 Mn from investors.

The problems for BYJU’S seem to grow with each passing day as the company’s three premises were recently raided by the Enforcement Directorate (ED) in connection with a Foreign Exchange Management Act (FEMA) probe. However, as per reports, the ED has not found any FEMA violations by the edtech startup.

Besides, BYJU’S has also seen many of its investors slashing its valuation, with the latest one being by BlackRock. The company is also yet to file its financial statements for the financial year 2021-22 (FY22). In FY21, it reported a 1,880% year-on-year (YoY) widened loss of INR 4,588 Cr.

Amid the funding winter and slowdown in the edtech sector, BYJU’S has laid off over 4,500 employees since 2022.

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