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Byju's, Term B Lenders Agree To Alter Loan Terms
Aakash Institute received just Rs 800 crore of the total loan, which was reliant on the edtech company resolving its problems with bondholders and connected to potential equity upside from an IPO
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According to media reports, edtech behemoth Byju’s has tentatively agreed to renegotiate its loan agreement with lenders who collectively own more than 85 per cent of its USD 1.2 billion Term B loan.
On July 24, a statement in this regard is expected. The goal of a Term Loan B (TLB) is to generate long-term returns on investment by paying investors interest while allowing the borrower time to repay the principal amount at the end of the term.
Byju’s and the lenders have committed to work together to achieve a signed and completed term loan amendment by August 3, 2023. Creditors will no longer demand rapid payback if the loan terms are successfully renegotiated. More crucially, any pending lawsuits may be settled without the lenders having to resort to enforcement measures.
Byju’s and the lenders have filed lawsuits against each other in US courts. According to a joint statement issued on June 9, the lenders called Byju’s case “meritless,” indicating escalating tensions between them. On the same day that Byju’s missed a USD 40 million interest payment to its TLB lenders, a lawsuit was filed in New York.
Glas Trust Company sued the edtech startup in Delaware, while Byju’s sued hedge fund Redwood and related subsidiaries in New York for “accelerated repayment. On May 13, Byju’s signed a Rs 2,000 crore loan from Davidson Kempner as part of the structured credit agreement.
According to the reports, Aakash Institute received just Rs 800 crore of the total loan, which was reliant on the edtech company resolving its problems with bondholders and connected to potential equity upside from an IPO.
After failing to provide audited FY22 and FY21 results on schedule, Byju’s was working on new terms with creditors.
After failing to provide audited FY22 and FY21 results on schedule, Byju’s was working on new terms with creditors. On March 20, the corporation offered to pay a higher interest rate to lenders as part of the updated terms for the USD 1.2 billion loan.
The edtech firm, which was valued at USD 22 billion last year, currently has only Raveendran, cofounder Divya Gokulnath, and Riju Ravindran on its board. Moreover, the Ministry of Corporate Affairs (MCA) has ordered an investigation into Byju’s books.