SUMMARY
The renegotiation of the loan has been prompted by the edtech giant being late in filing its financial statements again
BYJU’S is also in talks to raise $600 Mn - $700 Mn via a mix of equity and convertible notes, with some new investors
The edtech closed a $250 Mn funding round from existing investors such as Qatar Investment Authority (QIA) in October 2022
The lenders of the edtech decacorn BYJU’S have sought a prepayment of $200 Mn, along with a higher interest rate, as a precondition to restructure its $1.2 Bn Term Loan B (TLB).
Last month, media reports suggested that BYJU’S had agreed to raise the interest rate on the TLB by 200 basis points. However, even as the lenders have been seeking a faster repayment of the term loan B since December 2022, BYJU’S has yet to agree on the prepayment clause.
According to a recent ET report, the prepayment has become a sore point in negotiations with lenders, though it still is possible that all the lenders agree and reduce the prepayment amount.
“There was a discussion on a $200 Mn prepayment but it may end up being a smaller amount. Discussions are underway but the company is prioritising its funding deal to refinance some of its debt,” another person close to BYJU’S told the publication.
To be sure, BYJU’S is also in talks to raise $600-700 Mn via a mix of equity and convertible notes, with some new investors. A large chunk of the funding round is said to be through equity funding at a flat valuation of $22 Bn, which would be a much-needed boost for BYJU’S.
Incidentally, the conversations around the renegotiation of the loan, which was taken out by BYJU’S in November 2021, have been prompted by the edtech giant being late in filing its financial statements again. Reports suggest that the filing of FY22 financials by the end of September 2022 was one of the requirements in the TLB agreement.
Being late to the financials reporting, BYJU’S released its FY21 statements in September 2022, after an 18-month delay, and is yet to file the results for the year ended March 31, 2022.
The edtech giant has also been asked to provide fortnightly updates on its cash position, the ET report said. BYJU’S holds $650 Mn in its overseas accounts and has about $183 Mn (~INR 1,500 Cr) in liquid funds in India.
More importantly, BYJU’S has been able to sustain operations without dipping into its reserves, as its cash position has remained unchanged over the past few months.
Last week, BYJU’S appointed former Vedanta Group executive Ajay Goel as its new chief financial officer. Goel takes charge as BYJU’S looks to close negotiations for the TLB, which it had hoped to close in March itself.
Media reports from December 2022 also suggested that BYJU’S hiring a CFO was one of the terms for renegotiating the $1.2 Bn term loan.
“As CFO, Ajay will be responsible for overseeing financial strategy and management for BYJU’S. He will work closely with the founders and the senior leadership on strategy development, capital planning and financial analysis,” the edtech giant said on Goel’s appointment.
BYJU’S Chases Profitability
The company has been busy plugging away as it looks to become profitable. Last year, BYJU’S cofounder and CEO Byju Raveendran told Inc42 that the company would be in a position where BYJU’S, Aakash and Great Learning would start becoming profitable on a standalone basis by the end of FY23.
Among its many cost-cutting initiatives, it has fired more than 4,000 employees across its group companies, per Inc42’s ‘Indian Startup Layoff Tracker’.
However, it has failed to impress major investors, as the likes of BlackRock and Prosus have cut down BYJU’S valuation on two separate occasions.
Last week, BlackRock marked down the value of its holding in the edtech giant by nearly 50%, taking the edtech’s valuation to $11 Bn. Similarly, Prosus put the edtech giant’s ‘fair valuation’ at $5.98 Bn in November 2022.
