Discover the latest update on Byju’s, India’s most valuable startup, as Byju’s Plans $40 Million Quarterly Interest Payment on Troublesome $1.2 Billion Loan. Learn about the challenges faced by the ed-tech firm, its negotiations with creditors, and the potential consequences of default. Stay informed with this important financial news.
Divya Gokulnath and Byju Ravichandran
Byju’s, India’s most valuable startup, intends to fulfill its financial obligations by making a quarterly interest payment of approximately $40 million on a loan that has caused significant challenges for the company. Sources familiar with the matter reveal that the payment is expected to be made by Monday, meeting the June 5 deadline. However, the situation remains uncertain, and plans could potentially change, which would result in a default on the $1.2 billion loan.
Notably, this loan is the largest unrated loan ever by a startup. Byju’s, led by former teacher Byju Raveendran, had been engaged in negotiations with creditors to restructure the loan following a decline in the demand for online tutoring during the pandemic. Unfortunately, negotiations collapsed as creditors demanded accelerated repayment. The lenders, who have signed a cooperation agreement, are bound to act together during the negotiations.
The loan’s value had dropped to a record low of 64.5 cents per dollar in September, but it has since recovered slightly and is now quoted at around 78 cents, as per Bloomberg data.
By making the coupon payment on time, Byju’s hopes to buy some time until it secures a substantial capital infusion. The company’s lawyer has stated that this capital infusion will be utilized to repay the loan. Byju’s asserts that it is current on all debt payments and considers any defaults as technical breaches of the loan agreement. However, the company has failed to meet deadlines for filing its financial accounts for the year ending March 31. Additionally, the offices of Byju’s were recently searched by India’s agency responsible for investigating violations of foreign exchange policies.
