SUMMARY
Deliberation currently underway on terms such as lower coupon and more time to repay
Creditors and investors concerned about the edtech major’s ability to repay
BYJU’S raised $1.2 Bn Term B loan in November 2021 as it grew at a breakneck speed last year
As losses mount, edtech decacorn BYJU’S is reportedly seeking favourable terms for its $1.2 Bn Term B loan it raised last year.
News agency Bloomberg, citing sources, reported that the startup has appointed advisers to restructure the loan and discuss changes in the contours of the agreement.
Deliberations on “lenient” terms such as lower coupon and more time to repay are currently underway and no consensus has so far been reached on the matter.
The report also said that creditors are concerned about the edtech major’s ability to repay, leading to many selling the loans.
The concerns were largely attributed to the three-month Libor (London Inter-Bank Offered Rate) soaring 21X this year, making the loan much costlier for BYJU’S. The report added that the margin on the loan was raised by an additional 50 basis points in 2022 after the edtech giant’s parent company, Think & Learn Private Limited, failed to get rated.
The loan was last trading at 80 cents on the dollar. It fell to a record low of 64.5 cents in September this year.
BYJU’S Woes
The country’s highest-valued startup bagged $1.2 Bn in a term loan B funding round in November 2021 as it grew at a breakneck speed last year. However, 2022 has proved to be a disastrous year for the decacorn.
Amid negative investor sentiment, BYJU’S undertook a major restructuring exercise to cut down its losses and streamline operations. As a result, the company fired over 4,000 employees across its multiple subsidiaries.
Earlier, Inc42 reported that BYJU’S was looking to dial down operations in multiple cities and had also introduced an incentive-linked salary structure.
The company has also been in line of fire for questionable accounting practices and late filing of its financial reports. BYJU’S filed its statements for the financial year 2020-21 (FY21) after much delay in September 2022.
Its loss grew nearly 20X year-on-year (YoY) to INR 4,588 Cr in FY21 on a total income of INR 2,428.3 Cr.
Heavy cashburn, multiple cash-guzzling acquisitions and a flurry of initiatives have compounded problems for the edtech major which is already under stress owing to a negative market sentiment and apprehensions of recession.
In a bid to fuel further growth, BYJU’s raised a $250 Mn funding round in October this year and followed it up with a couple of loans from its subsidiary Aakash.
While the sentiment largely appears to be against the edtech giant, BYJU’S is still the biggest player in the segment and holds considerable clout in the edtech space which is poised to reach a size of $10.4 Bn by the end of 2025.
