A group of lenders which participated in edtech unicorn Byju’s $1.2-billion term loan offering are renegotiating terms of the debt, including faster repayment of part of the loan. However, these terms are unlikely to be accepted since these lenders make up a minority and can’t sway the previously agreed terms, sources close to the development told FE.
“At least 51% of the lenders have to agree with the new terms and conditions of the loan, including repayment. If this condition is not met, such a large loan issue cannot be rewritten and this is the standard clause in any term loan issue. The company is, however, unlikely to agree to any request for pre-payment and the originally agreed loan repayment terms will be met,” a person close to the edtech major said.
In November last year, Byju’s completed a $1.2-billion term loan B (LTB) raise with a five-year tenure. According to S&P Global, the term loan pledged a 6.78% yield to maturity rate but was an unrated issue. The terms of the loans dictated a nine-month period to get the issue rated, but it is unclear whether Byju’s has obtained a rating.
A spokesperson for the company declined to comment on the development.
Bloomberg reported on Tuesday that a few creditors who bought into the loan through primary holders in September have hired investment bank Houlihan Lokey to push for accelerated pre-payment of part of the loan. The report said Byju’s also hired Rothschild & Co to represent it in the talks. The edtech major has been looking to restructure the loan due to mounting losses and high cash burn.
In November 2021, when Byjus’ floated the TLB, it was initially seeking to raise $500 million, mostly for funding capital requirements and for business development purposes. However, the round size was increased to $1.2 billion due to high demand. The term loan issue received strong demand from large investors, including banks, financial institutions and wealth funds. The loan’s arrangers include JPMorgan Chase & Co and Morgan Stanley.
The push towards an early repayment of the loans comes at a time when Byju’s is in the news for multiple rounds of layoffs and questionable accounting practices which received scrutiny from its own financial auditor. Byju’s also came under intense scrutiny from the government and the ministry of corporate affairs after its FY21 financials were delayed by almost 18 months beyond the prescribed timeline.
Byju’s reported a loss of `4,564 crore in FY21. The financial statement showed the net loss saw an increase as promotion and employee expenses rose. Revenues fell 3.3% to `2,428 crore as it deferred about 40% of its revenue to subsequent years due to its new revenue recognition model.
