BYJU'S offers to repay $1.2 billion loan to lenders within 6 months

Beleaguered edtech company BJYU’S has presented a repayment proposal to its lenders, Bloomberg reported on Monday. The edtech company has offered to pay back its entire $1.2 billion term loan in less than six months.

As per the report, the company is offering to repay $300 million of the distressed debt within three months if the amendment proposal is accepted and the remaining amount in the subsequent three months. Moreover, the edtech company’s lenders are reviewing the proposal and are seeking more details about how the repayment will be funded, the report highlighted.

How did the conflict begin?

It is worth noting that BYJU’S and its lenders have been in conflict for almost a year after the edtech failed to repay interests on its loans. The company had raised $1.2 billion in debt through a term loan facility (TLB) from a group of overseas investors in November 2021. 

TLB is a type of senior secured syndicated credit facility that is issued by global institutional investors. The proceeds from a TLB are used to refinance an existing debt or to make overseas acquisitions in order to enhance a company's offerings.

In June 2023, the edtech sued the lenders in the New York Supreme Court, challenging the acceleration of the TLB. It also skipped paying $40 million in interest that was due post the acceleration. Since then, the two parties have been in conflict.

Loan from AMC Davidson Kempner

It is worth noting that in May this year, BYJU’S raised $250 million in structured instruments from Davidson Kempner, but the US-based AMC held back close to $150 million as the company’s talks with its lenders did not progress well.

BYJU'S also had a technical default on the Davidson Kempner loan. This prompted Byju Raveendran to raise funds to repay it, in order to avoid losing control of Aakash Educational Services because the company had offered Aakash's shares as collateral for the Davidson Kempner loan.

Regulatory and investor scrutiny

The company has been facing investor as well as regulatory scrutiny. Earlier this year, several employees claimed that the edtech company had not been paying provident fund dues to EPFO, which it had been collecting from employees. The EPFO started an investigation into the company and the edtech deposited the dues.

Furthermore, the company’s auditor Deloitte resigned citing ‘significant impact’ on its ability to audit the edtech due to BYJU’S failure to provide financial data despite repeated requests of the auditor. 

Also, G.V. Ravishankar of Peak XV erstwhile Sequoia Capital India, Vivian Wu of Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus exited the company’s board.