Indian ed-tech Byju's, lenders start talks to restructure $1.2 billion term loan

Embattled Indian ed-tech company Byju's has started talks with some of its lenders to restructure its $1.2 billion term loan, sources told Bloomberg.

The latest development comes amid allegations that India's most-valued startup had breached certain terms of its debt agreement. However, Bloomberg quoting unnamed sources said that Byju's and lenders want a swift resolution in order to not escalate the legal matter.

According to the Bloomberg report, the lenders have sought debt pay down, coupon boost and better investor protections on the billion-dollar loan. Byju's is expected to review the new proposal and reply by early next week, the report added.

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For the uninitiated, Byju's troubles with the $1.2 billion loan began when late last year, when it failed to make an immediate payment after filing its audited results for March 2022 by September - a breach of the loan agreement.

Byju's has been mirred in several financial problems, including several failed rounds of restructuring its term loan, which it secured in November 2021 from overseas market.

In a bizarre turn of events, the ed-tech firm chose to miss an interest payment of $40 million on its term loan in June, and instead filed a suit against its lenders, including Redwood, for 'predatory tactics'.

Byju's growing list of troubles

It is not just the billion-dollar term loan which has been bothering the startup, which was valued at a whopping $22 billion in 2022. The company has been struggling to make a profit but has seen its losses widening every year.

The edtech startup recorded a loss of $550.5 million in September for the fiscal year 2021, while revenue fell 3 percent.

In a bid to cut costs and become profitable, the company has also conducted three rounds of layoffs since last year. The mass layoffs have impacted over 4,500 employees across various verticals in the company.

Moreover, the company has not been filing its financial reports at regular intervals, leading to its auditor Deloitte resigning. The company has not yet submitted its audit report for the fiscal year 2022.

Byju's loan troubles and financial losseshave forced foreign investors tocut down Byju's sky-high valuation. Blackrock, one of the investors in Byju's, holding about a percentage of equity, cut the ed-tech's valuation to $8.3 billion in May this year.

In June, Prosus NV, a Dutch tech investor, cut Byju's valuation to $5.1 billion, a fall of over 75 percent from the $22 billion valuation last year.

Prosus cut the value of its 9.6 percent stake in Byju’s to around $493 million in the financial year ended March 31, Reuters reported.

(With inputs from agencies)