After a disagreement with lenders, education firm Byju’s decided not to make additional loan payments totaling $1.2 billion, escalating a dispute that may endanger the survival of one of India’s most successful startups.
People with knowledge of the situation claim that Byju’s failed to pay the $40 million in interest that was scheduled to be paid on Monday. The business announced in a statement on June 6 that it had complained to the New York Supreme Court over the loan.
“Given that legal proceedings are now on foot in both Delaware and New York, it is clear that the entire TLB is disputed,” the company said, referring to the $1.2 billion term loan B. “As such, BYJU’S cannot be expected to and has elected not to make any further payment to the TLB lenders, including any interest, until the dispute is decided by the court.”
After the online tutoring boom of the pandemic era peaked and Byju’s finances were strained, the company had been attempting to reach an agreement with creditors to restructure the debt. The protracted negotiations were abandoned, however, as creditors demanded an accelerated payback.
According to the individuals, who wished to remain anonymous since the situation is private, the payment had not been made as of 6 p.m. on June 5 in New York. According to the persons, several lenders are looking into ideas for how to handle a prospective payment default.
According to information gathered by Bloomberg, the loan dropped to a low of 64.375 cents on the dollar on Monday, from 78 cents on June 2.
The offices of the business run by former instructor Byju Raveendran were searched by the Indian agency that looks into infractions of the country’s foreign exchange laws because the business has previously missed filing deadlines for financial accounts.
The son of teachers, Raveendran, launched his own firm in 2015. Through a rise in demand for online education and a string of acquisitions, the company—whose parent company is officially called as Think & Learn Pvt—grew into the most valuable of the nation’s startups over the past ten years.
It attracted financing from Silver Lake Management, Naspers Ltd., Tiger Global Management, and Mark Zuckerberg’s Chan Zuckerberg Initiative. In order to go public last year, Byju’s had reached a valuation of $22 billion and had thought about joining forces with a SPAC.
Byju’s refuted the notion that its failure to pay interest indicated that business was experiencing financial difficulties.
“Byju’s remains financially robust with significant cash reserves,” it said in its statement. “It remains open to discussions with the TLB lenders.”