BYJU’S is laying off more employees across departments from its umbrella of companies, amid rising tensions between the edtech firm and its lenders on repayment of its $1.2-billion loan, a source familiar with the matter told DealStreetAsia.
While DealStreetAsia could not verify the number of impacted employees, media reports suggested the number could be between 500-1,000.
An employee with WhiteHatJr, the coding arm of BYJU’S, who has not yet been laid off, told DealStreetAsia, “The company is being super secretive about the reason and number of layoffs. Some laid-off employees are told their roles are redundant, while others are given cost optimisation as the reason. At WhiteHatJr, some employees are even told that their jobs will be handled by the BYJU’S team and they don’t need duplicate roles.”
“The management is ignoring emails and direct questions,” the source added.
BYJU’S declined to comment on a request by DealStreetAsia.
Struggling with mounting losses and rising layoffs, BYJU’S had 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.
Earlier this month, BYJU’S filed a complaint in the New York Supreme Court to challenge the accelerated $1.2-billion Term B Loan (TLB) and disqualify Redwood, alleging that it purchased a significant portion of the loan in violation of TLB terms, primarily engaging in distressed debt trading. The company did not pay the $40 million in interest for the loan.
In response, a group of ad hoc term loan lenders, who collectively own more than 85% of BYJU’S $1.2-billion term loan, issued a statement saying the edtech firm’s lawsuit against them is “meritless” and “simply an effort to avoid complying with its obligations, including making contractually required payments”.
In a court complaint dated May 23 reviewed by DealStreetAsia, the lenders said they were forced to exercise remedies following repeated—and conceded—events of default arising from BYJU’S Alpha’s (and its guarantors’) breaches of multiple covenants within the Credit Agreement, along with their failure to make good on any of their repeated promises to address these Events of Default and the Lenders’ concerns regarding their collateral.
Last week, the group of lenders said they were in negotiations with the company to resolve litigation and other disputes but will not engage in the Indian startup’s proposal for one-on-one meetings, according to people familiar with the matter. Bloomberg had first reported about the development.
Asked about the status of payment of the loan, BYJU’S co-founder Byju Raveendran told DealStreetAsia in a webinar in April, “The maturity date is November 2026. We are well-capitalised. We will evaluate options and explore options of potentially refinancing the loan with equity rounds.”