BYJU’S Lenders Looking For Amendment Proposal For $1.2 Bn TLB

Amid the ongoing legal tussle between edtech giant BYJU’S and its lenders for the $1.2 Bn Term Loan B (TLB), the creditors are reportedly looking to send the edtech decacorn a draft loan amendment proposal.

The development comes as hostilities between the two sides caused the scheduled call cancelled on Monday, people familiar with the matter told ET.

The person quoted above added that while the lenders are open to negotiations, they have rejected the edtech’s proposal for one-on-one meetings, as the lenders have signed a cooperative agreement that requires them to act together in negotiations.

Apart from the loan amendment proposal, the lenders are also considering options including further litigation or seizing the collateral as recovery.

To recap, BYJU’S filed a lawsuit in the New York Supreme Court against the US-based investment management firm Redwood and its entities over the TLB, claiming that the lenders’ demands were ‘high-handed’. The lawsuit was filed to ‘disqualify’ Redwood and its related entities, as the edtech giant called its lenders ‘hawkish lender-traders’.

BYJU’S added that Redwood continued to increase its exposure by acquiring a big stake in Term Loan B “with the intent to make windfall gains”.

“As such, BYJU’S cannot be expected to and has elected not to make any further payment to the TLB lenders, including any interest, until the dispute is decided by the court,” said the edtech on June 6, alluding to the disputed nature of the TLB, a day after missing its $40 Mn quarterly payment.

To be sure, the lenders have also sued BYJU’S in a Delaware court, where BYJU’S Alpha is facing a lawsuit over who should control the company. The edtech’s lenders claimed that because of a default earlier this year, they have the right to put their representative, Timothy R Pohl, at the helm.

Shortly after BYJU’S scathing comments, a group of lenders, who collectively own more than 85% of the $1.2 Bn Term Loan B, called the lawsuit ‘meritless’. “BYJU’S’ meritless lawsuit against its term loan lenders is simply an effort to avoid complying with its obligations, including making contractually required payments,” the group said in a statement.

The group, comprising 21 global institutional investors, said it has sought to work “constructively with the company over the past nine months to cure its numerous defaults” and will continue to do so in good faith.

“However, in the event that BYJU’S intentionally remains in default, the lender group reserves all rights available to it to enforce the credit agreement,” it added.

Amid all the legal drama, the edtech giant took time to launch a suite of GPT-powered products and services, BADRI, MathGPT, and TeacherGPT.