BYJU’S is being urged to use the $850 Mn in cash reserves of its unit based in the US to pay off a part of the debt
The edtech major is looking to restructure its term loan, seeking more lenient terms on the same
FY21 saw BYJU’S losses grow nearly 20X year-on-year (YoY) to INR 4,588 Cr on a total income of INR 2,428.3 Cr
A group of BYJU’S creditors has asked the edtech major to immediately repay a part of the $1.2 Bn Term B loan it raised last year. The creditors have recently bought into the loan as the edtech renegotiated the terms of the debt.
The edtech major is being urged to use the $850 Mn in cash reserves of its unit based in the US to pay off a part of the debt.
According to a Bloomberg report, the lenders have hired Houlihan Lokey Inc. to advise them on amending the covenants. The report added that BYJU’S breached a few terms of the loan, including the September deadline for filing its financials for the year ended March 31, 2022.
Rothschild & Co. is representing BYJU’S in the talks, according to the report.
The development has come after media reports suggested that the edtech major was looking to restructure its term loan, seeking more lenient terms on the same.
The lenders in the group asking for faster repayment of a part of the loan bought into the debt in September, when the loan fell to 64.5 cents. According to Bloomberg data, the loan was trading at 80 cents on the dollar on Monday (December 12). Therefore, the group of lenders is looking for a profitable exit from the debt by asking for repayment.
The move also comes after the three-month Libor (London Inter-Bank Offered Rate) increased 21X this year, which made the debt costlier for BYJU’S. According to last week’s reports, the margin on the loan was also raised by 50 more basis points as BYJU’S parent company Think & Learn failed to get a rating.
The renegotiated terms agreed upon by BYJU’S include providing monthly business updates, hiring a chief finance officer and increasing the interest rate on the loan, according to the sources cited by the publication. So far, BYJU’S has not hired a CFO.
Further, it is looking to restructure its debt as it struggled with steep losses over the last financial year. Per the company’s financial statements, FY21 saw BYJU’S losses grow nearly 20X year-on-year (YoY) to INR 4,588 Cr on a total income of INR 2,428.3 Cr.
The steep losses have prompted the edtech to lay off more than 4,000 employees across its multiple subsidiaries, including BYJU’S, WhiteHat Jr and Toppr.
BYJU’S term loan, which has been cited as one of the largest unrated term loan B offerings ever from a startup globally, was priced at 550 points over Libor in November 2021, according to JPMorgan Chase.
