Byju’s, a prominent Indian startup, currently finds itself confronted with a critical deadline to fulfil a payment of $40 million. According to undisclosed sources familiar with the matter, Byju’s is expected to execute the payment on Monday, ensuring compliance with the June 5th deadline. It is important to note that the situation remains dynamic, and plans may undergo modifications. Failure to meet the payment obligation by the specified date would result in a default on the $1.2 billion loan.
As India’s most valuable startup, Byju’s intends to make a quarterly interest payment of approximately $40 million on a loan that has significantly contributed to the financial challenges of the company. The aforementioned sources, preferring to remain anonymous due to the confidentiality of the information, have disclosed that the payment is scheduled for Monday to meet the June 5th deadline. It is worth mentioning that the situation remains fluid, and there is a possibility of plan revisions. Any inability to meet the payment deadline would lead to a default on the $1.2 billion loan.
Byju’s has not provided any comment in response to requests regarding the coupon payment. Representatives of Houlihan Lokey Inc., the firm hired by creditors to offer advisory services on the loan, have declined to provide any comments at this juncture.
The $1.2 billion debt stands as the largest loan ever secured by an unrated startup. Byju’s, formerly a highly successful company led by former teacher Byju Raveendran, had engaged in negotiations with creditors to restructure the loan, as the downturn in the online tutoring industry during the pandemic had a detrimental effect on its finances.
However, negotiations that had been ongoing for a substantial period were abruptly terminated by creditors demanding an accelerated repayment, as reported by Bloomberg last week. The lender consortium has reached a cooperation agreement that binds them to negotiate collectively, as stated by the aforementioned sources.
The loan, which plummeted to a record low of 64.5 cents per dollar in September, currently holds a valuation of approximately 78 cents, based on data compiled by Bloomberg.
Meeting the coupon payment deadline will provide Byju’s with the necessary flexibility to await a significant capital infusion. Byju’s legal representative has affirmed that this capital infusion will be allocated towards repaying the loan. It should be emphasized that the company remains up to date with all debt payments, and any defaults would be deemed technical breaches of the loan agreement, as stated by the firm.
Furthermore, Byju’s has failed to adhere to the deadlines for filing financial accounts for the fiscal year ending on March 31st. Additionally, the offices of the company underwent a search conducted by India’s agency responsible for investigating violations of the nation’s foreign exchange policies.