In a fresh setback for Indian edtech major BYJU’s, lenders have pulled out of negotiations to restructure a $1.2-billion loan, a source familiar with the matter told DealStreetAsia.
Bloomberg was the first to report on the development. BYJU’s declined to comment on the report.
The negotiations were called off after creditors moved to court accusing the firm of hiding $500 million. Lenders can now sell the term B loan securities after the court lifted the restraint, the source said.
The legal tussle involves creditors and BYJU’S over who should control BYJU’S Alpha.
BYJU’s, however, denied the allegation. “This is entirely incorrect… this is an interim order of a Delaware Court to maintain status quo in relation to BYJU’S Alpha, a non-operative US entity set up to receive the Term Loan B, with no employees,” said the spokesperson at BYJU’S.
BYJU’s has been in talks with lenders to make tweaks in covenants of the term loan B with creditors, including lower coupons and more time to repay.
When asked about the status of payment of the loan, BYJU co-founder Byju Raveendran told DealStreetAsia in a webinar in April, “The maturity date is November 2026. We are well-capitalized. We will evaluate options and explore options of potentially refinancing the loan with equity rounds.”
“It is true that the current macro environment has led to high-interest rates, which has made debt costlier for everyone. BYJU’s has enough and more cash reserves to meet all obligations,” co-founder Divya Gokulnath said during the same webinar.
BYJU’s has to make an interest payment on the loan by June 5, the people said. The company will get “a large capital infusion” soon that will allow it to pay down the loan, its lawyer said in a US court last month while denying allegations of hiding the funds raised as a loan, the Bloomberg report said.
Last month, BYJU’s closed $250 million in a fresh funding round from US-based fund manager Davidson Kempner Capital Management and is in talks to close another $750 million soon, a source familiar with the matter had told DealStreetAsia.
The loan, one of the largest unrated debt raised by a startup ever, slumped to a record 64.5 cents a dollar in September and is now quoted at around 79 cents, according to data compiled by Bloomberg.
Last month, the Enforcement Directorate (ED) — India’s financial crime agency —carried out searches in three of BYJU’S offices in the Indian city of Bangalore, which revealed that its parent firm, Think & Learn Pvt Ltd, had received a foreign direct investment of nearly Rs 28,000 crore between 2011 and 2023. The company remitted Rs 9,754 crore to various foreign jurisdictions between 2011 and 2023 in the name of overseas direct investments, the agency added.