Byju’s is attempting to restructure the debt as it attempts to reduce costs while incurring large losses: Report
According to persons familiar with the situation, a consortium of creditors to Byju’s, India’s most valued startup, has requested the firm to refund a portion of a $1.2 billion loan they just purchased as they renegotiate the terms of the debt.
According to the people who asked not to be identified because the information isn’t public, the lenders have hired Houlihan Lokey Inc. to advise them on amending covenants after the edtech titan breached terms, including a September deadline for filing its results for the fiscal year ended March 31, 2022. According to them, Rothschild & Co. is representing Byju’s in the negotiations.
According to two of the sources, the majority of the lenders in this group purchased the debt from main holders in September, when the loan fell to a record low of 64.5 cents, and are hoping to profit from hastened payback. Byju’s, Houlihan Lokey, and Rothschild representatives declined to comment.
The loan was trading at 80 cents on the dollar on Monday, while similar debt from another Indian startup Oyo Hotels is holding close to the issue price, according to data compiled by Bloomberg.
According to the persons, the renegotiated terms that Byju’s has already agreed to with the bulk of the lenders include producing monthly business reports, employing a chief financial officer, and raising the interest rate on the loan. Bloomberg News reported earlier this month that the corporation is looking to renegotiate the loan as it struggles with high losses and reaching cost-cutting objectives.
According to the persons, a tiny group of creditors is still seeking the corporation, valued at $22 billion, to utilise its US unit’s cash reserves of roughly $850 million to payback part of the year-old loan. According to JPMorgan Chase & Co., one of the deal’s bookrunners, the loan, priced at 550 points over Libor in November 2021, is one of the largest unrated term loan B offers ever from a new-age firm worldwide.
The renegotiated terms that Byju’s has already agreed with a majority of the lenders include providing monthly business updates, hiring a chief financial officer, and increasing the interest rate on the loan, the people said. The company is seeking to restructure the loan as it struggles with steep losses and meeting its cost reduction targets, Bloomberg News reported earlier this month.
