Byju’s Faces Critical Deadline Today in $1.2 Billion Loan Repayment Crisis
According to undisclosed sources, leading ed-tech firm Byju’s is expected to pay on Monday to meet the June 5 deadline for its $1.2 billion loan repayment. The loan, which has become the focal point of the company’s financial troubles, requires a quarterly interest payment of approximately $40 million. The situation remains fluid, and plans could potentially change. Failure to meet the deadline would result in a default on the loan.
Requests for comment regarding the coupon payment from Byju’s went unanswered, while representatives for Houlihan Lokey Inc., the firm hired by creditors for loan advisory services, declined to comment.
Notably, the $1.2 billion debt is the largest unrated loan ever issued to a startup. Byju’s, once a thriving company led by former teacher Byju Raveendran, had negotiated with creditors to restructure the loan after the decline of the pandemic-driven online tutoring boom severely impacted its financial standing. However, talks fell apart when creditors demanded an accelerated repayment, as reported by Bloomberg last week. The lender consortium has since entered into a cooperation agreement that binds them to negotiate.
The loan’s value, which reached a record low of 64.5 cents on the dollar in September, is currently quoted at around 78 cents based on Bloomberg data.
Timely completion of the coupon payment will buy Byju’s some time while awaiting a significant capital infusion, as stated by the company’s lawyer. This infusion is intended to be used for loan repayment. Byju’s asserts that it remains current on all debt payments, and any defaults should be considered technical breaches of the loan agreement.
The company has already missed deadlines to file its financial accounts for the fiscal year ending March 31, and its offices were recently searched by authorities investigating potential violations of the nation’s foreign exchange policies.