Byju’s and Lenders Reach Agreement to Restructure $1.2 Billion Loan: Report
- ByStartupStory | July 24, 2023
Edtech giant Byju’s has reached a tentative agreement with lenders to rework its loan pact, involving over 85 percent of its $1.2 billion Term Loan B (TLB), as reported by the Economic Times. The company and the group of lenders are working collaboratively towards a signed and completed term loan amendment by August 3, 2023. This agreement is crucial for Byju’s amid a series of crises, including the resignation of its auditor and key investors from the board.
The purpose of a Term Loan B is to generate long-term returns on investment while providing the borrower with time to repay the principal amount at the end of the term. The renegotiation of loan terms could halt the creditors’ demands for accelerated repayment and resolve ongoing litigations without enforcement actions.
Byju’s and the lenders have also filed lawsuits against each other in US courts. The joint statement released on June 9 saw the lenders terming Byju’s lawsuit as “meritless,” escalating tensions between them. A lawsuit was filed in New York after Byju’s missed a $40 million interest payment to its TLB creditors.
The Bengaluru-based edtech firm recently signed a structured credit deal with Davidson Kempner, receiving a Rs 2,000 crore loan. However, Aakash Institute has only received Rs 800 crore of the total debt contingent on Byju’s resolving its differences with bondholders and linked to potential equity upside from an IPO.
The need to rework the loan agreement arose after Byju’s failed to deliver audited FY22 and FY21 results on time. Deloitte, the company’s official auditor, resigned citing delays in receiving the financial statements, along with key investors like Sequoia Capital India, Prosus, and Chan Zuckerberg Initiative. The company has appointed BDO (MSKA & Associates) as its statutory auditor for the next five years.
Byju Raveendran, the company’s founder, and newly appointed CFO Ajay Goel assured shareholders that audited results for FY22 would be released by September, and FY23 results would be released by December 2023.
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