Byju's faces critical deadline in $1.2 billion loan repayment crisis
New Delhi, June 05: Byju's, a prominent edtech firm and one of the most valuable startups, is facing a critical deadline today regarding the repayment of a $1.2 billion loan. According to anonymous sources familiar with the matter, the company plans to make a quarterly interest payment of approximately $40 million to address the financial troubles surrounding the loan.
The payment is expected to be made on Monday to meet the June 5 deadline. It's important to note that the situation is still evolving, and plans could potentially change. If Byju's fails to make the payment by the deadline, it would result in a default on the $1.2 billion loan.
When approached for comment regarding the coupon payment, Byju's did not respond to the requests. Similarly, representatives from Houlihan Lokey Inc., the firm hired by the creditors to provide guidance on the loan, declined to comment.
This $1.2 billion debt represents the largest unrated loan ever taken by a startup. Byju's, led by former teacher Byju Raveendran, was once considered a highly successful company. However, the decline in the online tutoring boom during the pandemic has had a significant impact on its finances.
The company had been engaged in negotiations with the creditors to restructure the loan. Unfortunately, the talks fell apart after the creditors demanding an accelerated repayment decided to terminate the discussions, as reported by Bloomberg last week. The lenders, who are part of a consortium, have signed a cooperation agreement that binds them to negotiate as a unified front.
The loan, which reached a record low of 64.5 cents on the dollar in September, is currently quoted at around 78 cents, according to Bloomberg's data.
If Byju's manages to make the coupon payment on time, it will gain some breathing room while waiting for a significant capital infusion. The company's legal counsel has indicated that this infusion will be utilized to repay the loan. Byju's maintains that it is up to date on all debt payments, and any defaults should be viewed as technical breaches of the loan agreement, rather than a failure to meet financial obligations.
In addition to the loan repayment crisis, Byju's has encountered other challenges. The company has missed deadlines for filing its financial accounts for the fiscal year ending on March 31. Furthermore, its offices were subjected to a search by the agency responsible for investigating violations related to the nation's foreign exchange policies.
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- With inputs from agencies
