BYJU’S promises to repay lenders $1.2 billion in six months

The edtech company’s lenders are analysing the plan and are asking further specifics about how the payback would be made, the newspaper added.

According to Bloomberg, the beleaguered edtech startup BJYU’S has given a repayment plan to its lenders. The education technology firm has promised to repay its whole $1.2 billion term loan in less than six months.

According to the article, if the modification plan is granted, the corporation would return $300 million of the distressed debt in three months and the remainder amount in the following three months. Furthermore, the edtech company’s lenders are analysing the plan and looking for further information on how the payback would be paid.

What triggered the conflict?

It is worth mentioning that BYJU’s and its lenders have been at odds for over a year after the edtech failed to repay loan interest. In November 2021, the firm obtained $1.2 billion in loans from a consortium of offshore investors via a term loan arrangement (TLB). 

TLBs are senior secured syndicated credit facilities offered by global institutional investors. TLB revenues are used to restructure current debt or to make international acquisitions to expand a company’s services.

The edtech sued the lenders in the New York Supreme Court in June 2023, disputing the acceleration of the TLB. It also failed to pay $40 million in interest.

AMC Davidson Kempner loan

It is worth remembering that BYJU’s raised $250 million in structured instruments from Davidson Kempner in May of this year, but the US-based AMC withheld close to $150 million since the company’s conversations with its lenders did not go smoothly.

BYJU’s debt with Davidson Kempner was also technically delinquent. Byju Raveendran was compelled to seek cash to repay it in order to keep control of Aakash Educational Services, as the firm had pledged Aakash’s shares as security for the Davidson Kempner loan.

Investor and regulatory scrutiny

The corporation has been scrutinised by both investors and regulators. Earlier this year, numerous employees reported that the edtech business had failed to pay EPFO provident fund dues that it had collected from employees. The EPFO launched an inquiry into the corporation, and the edtech paid the back taxes.

Furthermore, the company’s auditor, Deloitte, quit, citing a’significant effect’ on its ability to audit the edtech as a result of BYJU’s inability to produce financial data despite the auditor’s repeated demands. 

G.V. Ravishankar of Peak XV, formerly Sequoia Capital India, Vivian Wu of the Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus also left the company’s board of directors.