A group of lenders to Byju’s will work with the Indian education-technology startup to change the terms of a $1.2 billion loan after the company fell into distress.
(Bloomberg) — A group of lenders to Byju’s will work with the Indian education-technology startup to change the terms of a $1.2 billion loan after the company fell into distress.
A steering committee of creditors — who together own more than 85% of the term loan — and Byju’s have agreed to work toward a “signed and completed” amendment before Aug. 3, the lenders said in a statement Monday, confirming a Bloomberg News story.
“Successful execution of the amendment would immediately solve for the loan’s acceleration and end all open litigation while avoiding further enforcement actions,” according to the statement.
A favorable agreement will be good news for the company, which was once India’s most valuable startup, but has faced a series of crises in recent months. The company’s auditors quit, India’s anti-money laundering officials searched its offices, and it skipped an interest payment on its term loan.
A spokesperson for Byju’s didn’t immediately respond to a request for comment.
Troubles have been mounting for Byju’s business, which boomed during the pandemic, with its flagship app topping 100 million users. The demand for online tutoring, however, dropped with schools reopening. Moreover, the startup spent heavily on marketing, such as sponsorship of India’s national cricket team and the FIFA World Cup, dragging finances.
There is no earnings statement for Byju’s for the financial year to March, 2022 in the public domain. The most recent available shows expenditure more than doubled in the year to March 31, 2021, while revenue fell.
Just last month, Deloitte Haskins & Sells resigned as auditors to Byju’s, citing a delay in submitting financial statements. That led the government to order an inspection of its finances. In that same month, Byju’s said it “elected” to halt making any payments on the $1.2 billion term loan and skipped a $40 million interest payment due that day. It also filed a lawsuit in New York, alleging a group of investors manufactured a fake debt crisis to extort money from it. The lenders’ group has called the lawsuit meritless.
The Economic Times reported earlier on the matter regarding changing loan terms.
Houlihan Lokey serves as financial advisor to the term loan lender group and Kirkland & Ellis LLP, Cahill Gordon & Reindel LLP, and Shearman & Sterling LLP are legal advisors.
–With assistance from Anto Antony, Divya Patil and Sankalp Phartiyal.
(Updates to add lenders’ statement)
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