Byju's, which is worth $22 billion, has hired an adviser to negotiate changes to the term loan B covenants with creditors...
Digital Desk: According to persons familiar with the situation, Indian online-education company Byju's is looking to renegotiate its $1.2 billion loan as it battles with high losses and cost-cutting targets.
The nation's most valuable startup, valued at $22 billion, has recruited an adviser to negotiate modifications in term loan B covenants with creditors, according to persons who asked not to be identified because the information is not public. Discussions on more forgiving conditions, such as a lower coupon and more time to repay, are ongoing, and no final decision has been made, one of the persons said, without offering any specifics.
Byju's is one of the many businesses that prospered on India's rising mobile connections and outside funding until their meteoric rise was cut short by excessive financial burn. Creditors are anxious about the company's capacity to repay, and several have sold down their loans, according to sources.
This year, the three-month Rate has increased more than 21 times, making the borrowing more expensive for the Bengaluru-based company. According to the persons, the loan's margin was increased by 50 basis points this year after its parent business, Think & Learn Pvt., failed to get rated.
The loan, which was priced at 550 points over Libor in November of last year, is one of the largest unrated term loan B offers ever made by a new-age economy business in the world, and it generated considerable demand from investors such as sovereign wealth funds. According to Madhur Agarwal, managing director of JPMorgan Chase & Co., one of the deal's bookrunners.
According to Bloomberg statistics, the loan is currently trading at 80 cents on the dollar, up from a record low of 64.5 cents in September.
A spokeswoman for Byju's declined to comment on whether the company is in discussions with lenders about loan arrangements.
The 150 million-user startup has faced a number of challenges, including a shortened fund raising, regulatory pressure, and a much-delayed filing of audited financial statements that revealed a 13-fold increase in losses for the fiscal year ended March 2021 — the most recent period for which financial accounts are available.
Byju's said in October that it will lay off 2,500 employees — around 5% of its entire staff — and reduce marketing and sales expenditures in order to become profitable by March. According to Bloomberg News, which cited people familiar with the process, the firm, established by Byju Raveendran, is also in negotiations with advisers for a $1 billion initial public offering of its teaching business Aakash Educational Services to improve its financial sheet.
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