Troubled edtech major, Byju’s will see its interest outgo on the $1.2 billion term loan further rising.  Fidelity Advisor, one of the lenders in the consortium, has almost doubled the rate to 15.5% in a year’s time, according to its filing with the Securities and Exchange Commission. Fidelity Advisor was charging 7.01% in July 2022 and had subsequently raised it to 10.7% in January this year.

In May, Natixis and American Beacon Funds, who are also part of the group of lenders, increased the interest rate from 7% to 12.98%. Another lender, Oaktree had also increased the same from 7% to 10.69%. Byju’s had raised the $1.2 billion term loan B (LTB) with a five-year tenure in November 2021. In December last year, a group of lenders which participated in the term loan offering, renegotiated the terms of the debt, including faster repayment of part of the loan.

Freezing the new terms for payment for the term loan has been one of the key pain points for Byju’s for the past few months. It has been working to secure new funds, but troubles related to test prep subsidiary Aakash Institute, as well as statements from investors like Prosus on corporate governance issues at the company have affected the process.

The current rate hike comes at a time when Arjun Mohan, who has taken charge as the new CEO of the company is restructuring the businesses, which also includes cutting the headcount by around 4,000-4,500 people to reduce costs.

Though Byju’s did not confirm the number of people who will be laid off in the process, it did confirm a restructuring exercise. “We are in the final stages of a business restructuring exercise to simplify operating structures, reduce the cost base and better cash flow management. Byju’s new India CEO, Arjun Mohan, will be completing this process in the next few weeks and will steer a revamped and sustainable operation ahead,” the company said in a statement.

Last month in a semi-annual financial report filed with SEC, Baron Select Funds, one of the investors in Byju’s, said, “Think & Learn, the parent entity of Byju’s – the learning app — was the top detractor as Covid-related tailwinds that benefited online/digital education slowed. In addition, Byju’s announced that Deloitte had resigned as its auditor along with three investor-appointed directors. These material adverse events required us to adjust down our stake’s fair market value. While disappointed, we believe that, as India’s largest education technology player, the company will benefit from structural growth in online education services in the country”.

The edtech firm recently vacated its largest office space in Bengaluru to cut costs. It’s also exploring sale of two of its  assets – upskilling platform, Great Learning and California-based reading platform, Epic – to generate around $800 million to $1 billion to repay the $1.2 billion term loan in the next six months. The company is also in talks with Abu Dhabi Investment Authority to raise fresh capital.

Byju’s had come under intense scrutiny from the ministry of corporate affairs (MCA) after its FY21 financials were delayed by almost 18 months beyond the prescribed timeline.

The company filed its FY21 results in September 2022, reporting that its net loss rose to Rs 4,588 crore from Rs 231.69 crore in FY20. The company’s total revenues during the year saw a marginal decline of 3.32% to Rs 2,428.39 crore. The huge jump in losses during the year was due to the deferral of 40% of revenues to subsequent years, but costs not getting deferred.

The company had then said that losses would reduce in FY22. However, Byju’s has still not filed its results for the year. It has said that the filing will be done by September 30.