BYJU’S to refinance part of debt through equity fundraise

Bengaluru-headquartered edtech major BYJU'S is looking to refinance a part of its $1.2 billion term loan B (TLB) through equity financing, said CEO Byju Raveendran at an online event. He added that the company was well capitalised to meet the prepayment clause from lenders.

Earlier this month, sources confirmed raising $700 million in an equity funding round at a flat valuation of $22 billion. The round was led by two West Asia-based sovereign wealth funds and a private equity fund. Of this, nearly $500 million has been earmarked for debt payments, said reports.

Speaking at a webinar by DealStreet Asia, Raveendran said, “The maturity date for the debt is only November 2026, there is a lot of time. We are well capitalised. In the current high-interest rate environment, we are exploring options of potentially refinancing through equity rounds.”

He did not disclose further details about the round.

Lenders of TBL had reached out to BYJU’S in November 2021 for a $200 million prepayment over restructuring the debt, according to reports. The company was in conversation with creditors to raise the interest rate by up to 300 basis points, on top of the Libor plus floating interest rate (floating rate equals base rate plus margin) of 550 basis points in March, the reports added. The report said that lenders cited the reason to recall loans on BYJU'S' delay in filing the financial results for FY21. 

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“The current challenging macro has led to higher interest rates. It has made debt servicing higher for all companies everywhere in the world. We have enough and more cash reserves to meet all debts,” said Divya Gokulnath, Co-founder at BYJU’S, at the webinar. 

It is to be noted that at the time of raising the debt, BYJU’S leveraged the record low-interest rates in the global markets.

Addressing queries on layoffs at the company, Raveendran said that the company currently has 55,000 employees and has had to lay off 5% of its total staff. “We never consolidated our acquisitions. By 2022, we had made six major acquisitions,” said Gokulnath, adding that the layoffs were a part of the consolidation. Further, the company claimed to have created 25,000 jobs during the time period. 

Raveendran added that the company was on track to reduce marketing burns significantly over the last six months and was currently focused on India and US markets, followed by the Middle East. 

(This story was updated to correct typos)