Edtech Start-Up Byju's Lenders Pull Out Of Negotiations To Restructure $1.2-Billion Loan: Report

The talks were called off after the creditors moved court, accusing the firm of hiding $500 million of funds raised

Byju’s has to make an interest payment on the loan by June 5, according to the report.

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India’s most valuable start-up, Byju’s, creditors have reportedly pulled out of negotiations with the company to recast a $1.2 billion loan, posing a new setback to the beleaguered tech firm, citing sources privy to the development told Bloomberg. According to the sources, the talks were called off after the creditors moved court, accusing the firm of hiding $500 million of funds raised. Lenders can now sell the term loan B securities of the company as the restraint that came as part of the negotiations is lifted, the sources told the news agency.

Last month, Byju's lenders have accused the start-up of concealing $500 million (approximately Rs 4,134 crores) in a US firm Alpha, one of its subsidiaries. According a Bloomberg, the company has been sued in the Delaware court in the US for the recovery of a $1.2 billion loan. The report said that Alpha Inc is being sued by a representative acting on behalf of lenders who are owed the aforementioned $1.2 billion. The lawsuit has been filed against Byju's Alpha, Tangible Play, Inc., and Riju Ravindran, who serves as the director of Alpha Inc. The case is known as Glas Trust Company vs Riju Ravindran, 2023-0488, Delaware Chancery Court (Wilmington).

According to the report, the move is a fresh challenge for one of India’s hottest tech firms, which has been working to appease creditors by offering prepayments and higher coupons to restructure the loan. Though the steering committee of lenders has discontinued the talks, the company will try to reach out to all lenders independently to renegotiate the terms, one of the sources said.

Byju’s has to make an interest payment on the loan by June 5, the people said. The company will get “a large capital infusion” soon that will allow it to pay down the loan, its lawyer said in a US court last month while denying allegations of hiding the funds raised as loan.

A spokesperson for Byju’s didn’t respond to an email seeking comment on lenders pulling out of the talks. A representative for Houlihan Lokey Inc., hired by creditors to advise them on loan restructuring, declined to comment.

The company had offered to increase the coupon on loan due 2026 by as much as 300 basis points and prepay part of the debt to renegotiate the agreement after it missed a deadline to file audited financial results.

The loan, one of the largest unrated debt raised by a start-up ever, slumped to a record 64.5 cents a dollar in September and is now quoted at around 79 cents, according to data compiled by Bloomberg.