BYJU’S Navigates Talks with Lenders Amidst Possible $50-60 Million Annual Interest Boost on $1.2 Billion Term Loan B
- ByStartupStory | August 9, 2023
Edtech giant BYJU’S might need to allocate an additional $50 million-$60 million annually for interest payments on its $1.2-billion term loan B (TLB) due to new terms being negotiated with lenders. The proposed interest rate, suggested by BYJU’S, falls in the range of 11-11.5%, subject to potential changes as ongoing discussions with lenders continue. BYJU and the lenders are expected to present a formal proposal later this week to expedite the finalization of new terms for the TLB.
BYJU and its lenders were initially expected to finalize a term loan amendment by August 3, 2023. A steering committee of ad hoc term loan lenders, owning over 85% of the TLB, expressed that a successful amendment would resolve the loan’s acceleration and ongoing litigation, avoiding further enforcement actions. Litigation between BYJU’S and lenders in the United States courts has been ongoing, with disputes arising over the loan’s terms and payment obligations.
BYJU’S Alpha, a wholly-owned subsidiary, secured the $1.2 billion TLB in November 2021. The loan was unrated and carried a Libor plus floating interest rate of 550 basis points. The proposed additional interest rate is in addition to the existing 550 bps. BYJU’S had previously suggested an increased rate of around 200 bps, which was not accepted by creditors.
Finalizing new terms for the TLB has been a complex process over recent months, complicated by issues involving BYJU’S test prep unit Aakash, TLB lenders, and investor concerns about corporate governance matters. Recent reports indicate that BYJU’S and US-based investment fund Davidson Kempner are in discussions to address a dispute related to a loan covenant breach linked to Aakash. In May, BYJU’S raised $250 million through structured instruments from Davidson Kempner against its shareholding in Aakash.
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