Edtech

BYJU’S offers higher interest rate on $1.2B loan

• ByStartupStory     |    March 20, 2023

Edtech company BYJU’S has proposed to increase the interest rate on its $1.2 billion term loan B (TLB) as part of renegotiating its debt financing arrangements. 

The reason for this proposal is due to lenders recalling loans following a delay in providing audited financials for FY21. This negotiation also includes the FY22 financials, which have not yet been filed with the Registrar of Companies (RoC). 

The financials for FY21 were filed by BYJU’S after a delay of 18 months with the standard accounting bodies in India. Additionally, the unclear timeline for filing the FY22 financials is causing concerns among all stakeholders involved.

BYJU’S is currently negotiating with its creditors, and the founder and CEO, Byju Raveendran, is personally involved in these discussions. The company is proposing to increase interest rates by a minimum of 200 to 300 basis points (bps). The negotiations are ongoing, and it is anticipated that BYJU’S will finalise the new terms within the next two weeks.

The term loan B (TLB) of $1.2 billion that BYJU’S is renegotiating is scheduled to be repaid in 2026, and the proposed interest rate change does not indicate any default on the part of the company. To facilitate the new agreement, both BYJU’S and its creditors have retained the services of individual advisors and law firms.

At the time of the raise, this was the largest term loan B (TLB) raised by an Indian startup, but it was unrated. BYJU’S secured this financing to fund its acquisitions and expansion in the North American market.

Amid the current economic condition, Byju’s is feeling restricted to make new investments. Moreover it’s potential acquisitions in the US has been put on hold.

The Bengaluru-based edtech unicorn was planning to raise as much as $250 million through the issuance of convertible notes by its test prep service provider, Aakash Educational Services Ltd (AESL). 

WhiteHat Jr. which was acquired by BYJU’S in 2020, has contributed less than 10% in company’s overall business.

The startup reported a loss of Rs 4,564.38 crore in FY21, bigger than its FY20 loss, which stood at Rs 305.5 crore.

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