BYJU’S Yet To Receive The Entire $250 Mn Debt Funding From Davidson Kempner

Embattled edtech major BYJU’S has reportedly not yet received the entire $250 Mn (about INR 2,000 Cr) of debt funding committed by the US-based alternative investment firm Davidson Kempner as the startup has not met the terms put forth by the firm so far.

Last month, it was reported that BYJU’S raised $250 Mn through structured investments from Davidson Kempner. The capital commitment came as a relief to the troubled startup and was expected to help BYJU’S avert a potential debt crisis.

“However, as the talks with lenders have not progressed as expected, Davidson Kempner has withheld the transfer of the full amount,” Economic Times cited a person aware of the matter as saying. 

BYJU’S and its lenders are back on the negotiating table and have mutually agreed to find a solution by August, the report claimed.

BYJU’S was not immediately available to respond to Inc42’s query on the matter.

The report cited BYJU’S ongoing legal battle with lenders of its $1.2 billion term loan B (TLB) and the delay in filing its financial statements for the year ending March 31, 2022 (FY22) as the reason for the non-completion of the transaction with Davidson Kempner. 

“Davidson Kempner has imposed a condition precedent (CP) on the loan which is resting on the filing of its financial accounts,” another person familiar with the matter was quoted as saying. 

However, another person aware of the matter told the publication that the investment firm had transferred two tranches of INR 800 Cr to BYJU’S. “There are certain terms and conditions upon which the full amount will come into the company, Byju’s is working towards that,” the person was quoted as saying.

Earlier this month, The Morning Context reported that a large part of the funds committed, around INR 1,200 Cr of it, will only be available based on Aakash’s audited earnings reports for 2021-22 and 2022-23. Sources aware of the development then told the publication that the first tranche of the funds BYJU’S received was used for paying salaries and vendors and for meeting general expenses.

In the past few days, the ongoing problems at BYJU’S have escalated and created huge pressure on the beleaguered company. Last week, its three early-backers and board members – GV Ravishankar, MD of Peak XV Partners (formerly Sequoia Capital India), Russell Dreisenstock of Prosus, and Chan Zuckerberg Initiative’s Vivian Wu – resigned from the board.

Adding to the troubles further, Deloitte too tendered its resignation as the statutory auditor of BYJU’S citing the delay in releasing the financial statements for FY22.

It was also reported that the startup had been delaying payments of provident fund (PF) for its employees since October last year. However, following a directive from the Employees’ Provident Fund Organisation (EPFO), BYJU’S has now remitted the PF dues for August 2022 to May 2023.

Meanwhile, in a relief, a Delaware Court has rejected a plea filed against BYJU’S by its $1.2 Bn TLB creditors, which sought a probe into the transfer of $500 Mn from BYJU’S Alpha, its US-based subsidiary to other entities.

Amid these ongoing troubles, BYJU’S is now reportedly in advanced talks with new investors for a $1 Bn fund raise.