Byju’s, the prominent ed-tech startup, is anticipated to make a significant $40 million payment on Monday, representing the latest instalment of its highest unrated loan of $1.2 billion. The company is required to meet the quarterly interest payment on June 5, which also serves as the deadline for the instalment.
Failure to fulfill the quarterly interest payment would result in a default on the loan, which has become the focal point of the beleaguered firm’s financial challenges.
Bloomberg, citing anonymous sources, reported that the $40 million payment is expected to be made on June 5. However, the situation remains fluid, and Byju’s payment plan could potentially change.
Byju’s firm has not responded to requests for comment regarding the coupon payment, and representatives for Houlihan Lokey Inc., the advisors hired by creditors for the loan, have also refrained from commenting on the matter.
The loan in question is the largest unrated debt ever issued by a startup. Byju’s fortunes fluctuated following the reopening of schools after the pandemic. The company experienced significant profit growth during the pandemic-induced boom but encountered a substantial decline when the online tutoring demand waned.
As a result, Byju’s has been actively seeking to restructure the loan through negotiations with creditors. However, long-term negotiations were abandoned after creditors demanded an accelerated payment, as reported by Bloomberg. The lender consortium has signed a cooperation agreement binding them to negotiate together.
Previously, the mega loan was valued at 64.5 cents per dollar in September. However, it has now risen to 78 cents, according to Bloomberg.
Making the coupon payment on time holds immense importance for the troubled startup, as it would provide Byju’s with some breathing room to secure a “large capital infusion.” The company’s lawyer stated that this infusion would be utilized to repay the loan.
Byju’s is currently up-to-date on all debt payments, and any failure to pay should be considered a technical breach of the loan agreement.
It is worth noting that Byju’s has missed deadlines to file financial accounts for the fiscal year ending on March 31. Additionally, the firm has been subjected to an audit by an Indian agency to investigate potential violations of Indian foreign exchange policies, further complicating the company’s situation.
