Edtech firm BYJU’S proposes to pay higher interest rate on $1.2B loan
The company is in talks with creditors about raising interest rates by at least 200 to 300 basis points (bps).
As part of renegotiating its debt financing arrangements, edtech firm has offered to raise the interest rate on its $1.2 billion term loan B (TLB) to its lenders.
The negotiation of a higher interest rate is the result of lenders recalling loans caused by a delay in furnishing audited financials for FY21, as reported by The Economic Times. The revisions are also linked with the FY22 financials, which are yet to be filed with the Registrar of Companies (RoC).
The FY21 financials were filed after an 18-month delay with regular accounting bodies in India. Also, the hazy timeline on the FY22 filings is raising questions among all the stakeholders.
The company is in talks with creditors about raising interest rates by at least 200 to 300 basis points (bps). Founder and CEO Byju Raveendran is directly involved in the talks.
As per the ongoing discussions, BYJU’s is expected to close the new terms over the next two weeks.
YourStory has not independently verified this report.
According to the report, the $1.2 billion TLB is due in 2026, and the interest rate change does not mean there's any default on the part of BYJU’s. The edtech major and the creditors have engaged individual advisors and law firms to close the new agreement.
This was the biggest TLB being placed by an Indian startup at the time of the raise, but the loan was unrated. The company had picked up this financing for its acquisitions and expansion in the North American market.
BJYU's has been under pressure to improve its finances and is restricting new investments amid the current microeconomic conditions. Also, its potential acquisitions in the US has been put on hold.
The TLB was set at Libor plus a floating interest rate of 550 bps. The additional interest rate being discussed by BYJU's is on top of the 550 bps.
According to a report, the Bengaluru-based edtech unicorn was planning to raise as much as $250 million through the issuance of convertible notes by its test prep service provider, Aakash Educational Services Ltd (AESL).
BYJU’s acquired WhiteHat Jr. for about $2 billion in 2020, which contributes less than 10% of its overall business.
The startup, which was last valued at $22 billion, reported a loss of Rs 4,564.38 crore in FY21, bigger than its FY20 loss, which stood at Rs 305.5 crore.