- The edtech firm accounts for $1.2 billion debt, largest for an unrated startup
- Missing the 5 June deadline will result in a default on the loan amount
Byju's, the educational technology frontrunner in India, is reportedly planning to make a quarterly interest payment of approximately $40 million on a loan that has been causing financial difficulties for the company.
Notably, the $1.2 billion debt is the largest loan ever taken by an unrated startup. Byju's led by former teacher Byju Raveendran, previously an extremely successful company, had been engaged in negotiations with creditors to restructure the loan after the decline in the online tutoring industry. The pandemic severely impacted the company’s financial position.
However, the negotiations were terminated by creditors demanding an expedited repayment, as reported by Bloomberg last week. As a result, the lender consortium has entered into a cooperation agreement, committing them to negotiate collectively, according to the sources.
Meeting the coupon payment deadline will provide Byju's with some flexibility to await a "large capital infusion," which the company's lawyer mentioned would be utilized to pay off the loan.
Byju's asserts that it is currently up to date with all debt payments and any defaults should be regarded as technical breaches of the loan agreement.
The company has missed deadlines to file financial accounts for the fiscal year ending March 31, and its offices were searched by the Indian agency responsible for investigating infractions of foreign exchange policies.
The edtech firm aims to meet the June 5 deadline by making the payment on Monday, as per the sources. It should be noted that the situation is subject to change. If Byju's fails to make the payment by the due date, it will result in a default on the $1.2 billion loan.
Byju's has not responded to requests for comment regarding the coupon payment, while representatives for Houlihan Lokey Inc., hired by creditors for loan advisory purposes, have declined to comment.