Byju’s, the most valuable Indian startup reportedly wants to borrow $1.2 billion with kinder terms
- ByStartupStory | December 7, 2022
According to persons familiar with the situation, Indian online education firm Byju’s is trying to restructure its $1.2 billion debt as it battles with significant losses and cost-cutting goals.
According to the persons, who asked to remain anonymous since the information is private, the $22 billion company with the highest valuation in the country has hired a consultant to talk to creditors about modifying the covenants of the term loan B. Without going into more detail, one of the people stated that discussions on more lenient terms, such as lower coupons and longer repayment periods, are still ongoing and that no decision has been made.
Byju’s is one of the businesses that benefited from the expansion of mobile connections in India and foreign funding up until its explosive development trajectory was halted by excessive cash burn. According to them, many creditors have sold down their loans because they are worried about the company’s capacity to make payments.
This year, the three-month Libor has increased by more than 21 times, increasing the cost of the loan for the company with its headquarters in Bengaluru. After its parent company, Think & Learn Pvt., failed to receive a rating, the margin on the loan was increased by an additional 50 basis points this year, according to the sources.
One of the largest unrated term loan B offerings from a new-age economy company ever, the loan was priced at 550 points over Libor in November of last year and was in high demand from investors, including sovereign wealth funds. One of the deal’s bookrunners, Madhur Agarwal, managing director at JPMorgan Chase & Co., remarked at the time.
According to information gathered by Bloomberg, the loan reached a record low of 64.5 cents in September and is currently trading at 80 cents on the dollar. A Byju’s representative declined to comment when asked if the company was in contact with lenders to discuss the loan terms.
A 13-fold increase in losses were reported for the year ended March 2021, the most recent period for which its financial accounts are available, for the closely held startup, which has 150 million users. The startup has been battling multiple headwinds, including a truncated fund raising, regulatory pressure, and a much-delayed filing of audited financial statements.
In an effort to turn a profit by March, Byju’s said in October that it will lay off 2,500 employees, or roughly 5% of its overall employment, and reduce its marketing and sales expenses. According to people familiar with the situation, It was reported last month that the company, which was founded by Byju Raveendran, is also in discussions with advisers for a $1 billion initial public offering of its tutoring business Aakash Educational Services, to strengthen its balance sheet.
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