BYJU’S Reaches Tentative Agreement With Lenders To Restructure $1.2 Bn Loan

Edtech startup BYJU’s has tentatively agreed to rework its loan pact with lenders for its $1.2 Bn Term B loan.

The lenders with whom BYJU’S in talks with own more than 85% of the term loan.

The edtech startup and the group of lenders have decided to work collaboratively toward a signed and completed term loan amendment by August 3, 2023, as per an ET report.

If BYJU’s is able to renegotiate loan terms with the creditors successfully, the creditors will cease to demand accelerated repayment. In addition, all ongoing litigation could be resolved without the lenders initiating enforcement actions.

As edtech decacorn BYJU’S wades through a rough patch, the debt crisis has been one of the major pain points for the company. Hence, if a solution comes on this front could be significantly helpful for the troubled startup.

In June, the company stopped payments to its TLB lenders and dragged one of its TLB lenders to the New York Supreme Court. It also then sought to disqualify Redwood as a lender.

The edtech argued that even though Redwood primarily trades in distressed debt, it purchased a significant portion of the TLB and has been spearheading a series of ‘predatory tactics’ against it.

It was also reported that the creditors pulled out of the negotiations with the startup to restructure its loan worth $1.2 Bn.

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

Further, Deloitte Haskins and Sells resigned as the auditor after serving the company for more than six years. The firm cited multiple delays and non-responses from Raveendran while conducting the FY22 audit. 

Three key board members, including Peak VX Partners’ (formerly Sequoia Capital India) GV Ravishankar, Chan Zuckerberg Initiative’s Vivian Vu, and Prosus’ Russell Dreisenstock, put in their papers.

In one of its biggest challenges, the company saw its net loss surge a massive 1,880% YoY to INR 4,588 Cr in FY21. It has also been hit with multiple valuation markdowns by its investors such as BlackRock and Prosus.