BYJU’S creditors pull out of talks for $1.2 bn loan, accuse firm of hiding $500 mn of funds raised: Report  

Edtech giant BYJU’S creditors on Thursday have pulled out of talks to restructure a $1.2 billion loan. The new setback to the embattled edtech firm came after the creditors moved court and accused the firm of hiding around $500 million out of the funds raised, Bloomberg reported citing sources aware of the matter.  

Sources further said lenders can now sell the term loan B securities of the firm. BYJU’S in March this year offered to raise the interest for its $1.2 billion term loan as part of renegotiating debt-financing arrangements. BYJU’S has to make an interest payment on the loan by June 5, one of the sources said.  

BYJU’S offered to increase the coupon on loan due 2026 by around 300 bps and prepay part of the debt to renegotiate the agreement after it missed a deadline to file audited financial results. This loan is also touted to be one of the largest unrated debt raised by any startup ever.  

Another person aware of the matter underscored that though lenders discontinued the talks, the company will try to reach out all lenders independently to renegotiate the terms of the loan.  

A BYJU’S spokesperson told Bloomberg that the borrowed funds were transferred in “full compliance of loan agreement and did not contravene any terms of the agreed-upon rights and responsibilities”. The spokesperson further added that even the lenders have not claimed the funds transfer was not permitted under parties’ existing contractual arrangement.  

The edtech company is in discussions to revise its debt raising the interest on the loan by around 200 basis points (bps) to 300 bps. The loan, which was raised in November 2021, has to be paid by 2026. The loan has an interest rate of 550 bps and the additional interest rate being negotiated is on top of the 550 bps.  

The company’s proposal was rejected by lenders. They suggested an alternate repayment plan of the loan and securing cash. The lenders also reportedly cited the delay in publishing FY21 audited results and the yet-to-be-published FY22 results as a reason for recalling the loans.  

Upon the payment of this loan, the company will get “a large capital infusion” soon which will allow paying down of the loan, a lawyer representing BYJU’S said in a US court last month.  

This, however, is not the only setback for Byju Raveendran and Divya Gokulnath-led BYJU’S. US-based investment management firm BlackRock slashed BYJU’S valuation again in May.  

The US-based investment management firm fixed the value of the company’s shares at $4,043,471 and estimated its fair value at $8.4 billion as of March 31, 2023. BlackRock slashed the valuation of the edtech startup by 62 per cent after cutting its fair value from October 2022, as per its AMC filing with the US Securities and Exchange Commission (SEC).  

Also read: More trouble for BYJU’S: Company faces lawsuit in the US

Also read: BYJU’S is offering to pay a higher interest rate for its $1.2-bn loan: Report

Also read: BlackRock slashes BYJU'S valuation by 62% to $8.3 billion