Byju’s considering sale of Great Learning and Epic to settle $1.2 billion term loan

Troubled edtech major Byju’s is engaging with potential suitors to sell two of its key assets, even as it awaits the long elusive fresh equity funding to pay off debts.

The company has put two of its group firms -- higher education platform Great Learning and kids-focused digital reading platform Epic – on sale to raise immediate funds to meet the repayment obligations towards the $1.2 billion of Term Loan B it availed from a consortium of US-based creditors, sources close to the development said.

“They have been exploring many options, but the most feasible one at this point looks like an asset sale. They hope to make around a billion dollars from these two firms,” said one of the people on condition of anonymity.

Byju’s acquired Great Learning for $600 million and Epic for $500 million in cash and equity deals in July 2021. These deals were part of a series of acquisitions the company made in 2021 as digital education grew exponentially due to Covid-related restrictions. During the hyper-growth years of 2020-2021, the Bengaluru-based company made approximately $3 billion worth of acquisitions.

Though it raised significant amount of capital during the time, the equity capital wasn’t enough to fund the extravagant acquisitions, especially as it continued to burns cash on operations.  Byju’s then turned to large debt providers in the US to raise a massive term loan.

The TLB, secured for a five-year period at a yield to maturity (YTM) of 6.78 per cent in November 2021, came back to bite the company in June of this year when it missed a $40 million loan repayment. It subsequently filed a lawsuit against its lenders, countering their legal actions, accusing them of using predatory tactics.

As per people in the know of the development, lenders were renegotiating the rate to be around 10-11 percent. This would mean that the company has to set aside $100-120 million dollars from its cash flow each year to meet these new terms.

Byju’s did not respond to BT’s query regarding the development.

Earlier today, Bloomberg had reported that the company has presented a repayment proposal to its lenders, offering to pay back its entire term loan in less than six months. As per the report, Byju’s has offered to repay $300 million of the distressed debt within three months if the amendment proposal is accepted and the remaining amount in the subsequent three months.