BYJU’S to renegotiate terms with Term B loan creditors: Report

In a latest development, beleaguered Indian edtech major BYJU’S has reportedly agreed to rework its loan agreement with lenders who collectively own more than 85 per cent of its $1.2 billion Term B loan. It is worth noting that both the parties were in disagreement over the terms for some time now.

As per a report in Economic Times, BYJU’S and its Term B loan creditors have agreed to work together to finalise a term loan amendment by August 3, 2023. It is worth noting that if the loan terms are successfully renegotiated, the creditors will cease to demand accelerated repayment. More importantly, all ongoing litigation could be resolved without the lenders initiating enforcement actions.

 The disagreement between BYJU’S and the lenders rose earlier this year when the company was unable to pay $40 million in interest payments to the creditors of the Term B loan. The lenders filed a suit against the edtech company in the US courts. BYJU’S countered this with a suit of its own against the lenders in the US courts. 

After the edtech company filed its lawsuit, the lenders released a joint statement noting that BYJU’S playsuit was “meritless.”

The ongoing year has exacerbated the challenges faced by the company. Their auditor, Deloitte, resigned citing inability to audit the firm due to lack of cooperation. After that,  G.V. Ravishankar of Peak XV, formerly known as Sequoia Capital India, along with Vivian Wu of Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus exited the company’s board.

To put investors at ease about the firm's corporate governance practices, the edtech company announced on July 13 that former State Bank of India chairman Rajnish Kumar and former Infosys chief financial officer Mohandas Pai had joined its board advisory committee (BAC).

At present, only Raveendran, co-founder Divya Gokulnath, and Riju Ravindran are on the board of the edtech startup, which was valued at $22 billion last year.

Moreover, the edtech company is also facing regulatory scrutiny. The ministry of corporate affairs (MCA) has ordered a probe into BYJU’s books.