BYJU’S-Owned US Firms Sold At Knockdown Prices

Two edtech firms bought by BYJU’S during its US stint were reportedly sold off by the group of lenders who had sued it for a repayment of $1.2 Bn term loan B (TLB).

In a bid to settle accounts, both these subsidiaries Tynker and Epic! were sold at a massive haircut.

While Tynker was bought by computer science learning platform CodeHS for $2.2 Mn in a cash deal, which is almost a 99% reduction from $200 Mn paid by BYJU’S when it acquired the coding platform back in 2021, Epic! was snapped up by Chinese education company TAL Education Group at a steep discount of 81% for $95 Mn. BYJU’S doled out $500 Mn while acquiring Epic! in 2021, 

An EdWeek Brief Market report said that the acquisitions were approved by US bankruptcy court Judge Brendan Shannon in a May 20 hearing.

The deal is a part of the Bengaluru-based BYJU’S $1 Bn expansion plan in the US. 

Founded in 2013 by Suren Markosian and Kevin Donahue, Epic! provides kids and their parents access to books and quizzes so that children could learn from anywhere. While Tynker, founded in 2012, is a K-12 creative coding platform that enables students to develop coding skills to design and power animations, games, music, robots and drones, smart devices, virtual worlds and more.

The above fire sales were part of BYJU’S bankruptcy process in the US which involved an unpaid term loan of $1.2 Bn. 

According to Inc42’s analysis, the  edtech major had been on an acquisition spree in the year 2021. In fact, between 2017 and 2021, BYJU’S made 17 buyouts and spent about $3 Bn to expand its edtech empire. Back then, the startup cited product line and user base expansions behind these acquisitions.

BYJU’S US Bankruptcy Saga

At the heart of the fire sale of Epic! And Tynker is BYJU’S bankruptcy case against the edtech company. BYJU’S Alpha, a bankrupt US-based subsidiary of the edtech company had faltered on paying back a term loan of $1.2 Bn which was facilitated by 37 different credit institutions. 

Due to mounting losses and freefall in revenues, BYJU’S could not pay back its loans and its US lenders dragged the company to court. Besides, it also surfaced that out of the term loan, BYJU’s had made fraudulent transfers of $533 Mn to Camshaft Fund. 

In March, A US bankruptcy court ruled in favour of the lenders of BYJU’S in connection with the above case. 

It is pertinent to note that while the foregone edtech major had invested $700 Mn for acquiring Tynker and Epic!, the liquidation process part of the bankruptcy proceedings could only fetch a little more than $97 Mn. 

BYJU’S is also facing insolvency proceedings in India and recently the brother of BYJU’S cofounder Byju Raveendran’s and former director of the edtech Riju Raveendran moved the National Company Law Tribunal (NCLT) seeking the removal of its US-based lenders from the committee of the creditors.