BYJU’S, Davidson Kempner initiate talks to resolve dispute over Aakash: Report

Edtech firm BYJU'S and US-based investment fund Davidson Kempner Capital Management have reportedly initiated discussions to resolve their disagreement concerning a loan covenant breach tied to the former’s test prep unit Aakash Educational Services Ltd (AESL).

In May, the Bengaluru-based firm had raised $250 million (~Rs 2,000 crore) through structured instruments from Davidson Kempner against its shareholding in Aakash.

The Economic Times reported that BYJU’S has proposed to repay funds from the loan it used along with interest, while Davidson Kempner seeks extended interest on the entire amount for one to two years, differing from Byju Raveendran's quarter proposal.

From the loan, BYJU'S has received about Rs 800 crore, utilising over Rs 600 crore from the credit facility, the report noted.

The discussions will focus on the payout amount to be agreed upon, potentially settling in between, as Davidson Kempner aims to recover its funds from BYJU’S and conclude the matter, the report added.

YourStory has reached out to BYJU’S and Davidson Kempner for comments.

AESL’s minority stakeholders, Blackstone Group and the Chaudhry family, collectively own 30% of the test prep unit, while BYJU'S parent company, Think & Learn Pvt Ltd, holds 43%, and its founder, Byju Raveendran, maintains a 27% stake. Raveendran is said to have offered a portion of his equity in Aakash as collateral for the loan.

According to the report, Manipal Group chairman Ranjan Pai has concluded an approximately $80-million investment in Aakash, intended to repay Davidson Kempner, with Pai set to acquire a stake in Aakash from Raveendran.

In June, reports emerged that BYJU'S was seeking investors to divest a portion of its stake in Aakash. The Morning Context had reported that a consortium of investors, spearheaded by Pai, is engaged in talks to inject funds into Aakash.

Last week, Davidson Kempner reportedly initiated the reconstitution of the board of Aakash to improve governance after levelling allegations of financial misconduct against BYJU'S. It has inducted at least four new independent and nominee directors in the test prep unit.

Meanwhile, BYJU’S is also slated to convene discussions with lenders to formalise and execute new agreements for a $1.2-billion term loan B. BYJU’S and its lenders were expected to finalise a term loan amendment before August 3, 2023.

In June, the edtech company said the FY22 audit is expected to be completed by the end of September, while the FY23 audit is slated to be concluded by the end of December.

In FY21, the edtech giant reported a loss of Rs 4,564.38 crore, which was significantly larger than its FY20 loss of Rs 305.5 crore.