BYJU’S, the troubled edtech major, has reportedly not yet received the entire $250 million (about INR 2,000 crore) debt funding committed by US-based alternative investment firm Davidson Kempner. The startup has allegedly failed to meet the terms set forth by the firm so far, leading to a delay in the transfer of funds.
Last month, it was announced that BYJU’S had secured $250 million through structured investments from Davidson Kempner. This capital infusion was expected to provide much-needed relief and help the company navigate its impending debt crisis.
However, talks with lenders have not progressed as anticipated, resulting in Davidson Kempner withholding the full amount, according to sources familiar with the matter. The report suggests that BYJU’S and its lenders are currently engaged in negotiations and have mutually agreed to find a solution by August.
At the time of reporting, BYJU’S had not responded to queries regarding the matter.
The ongoing legal battle between BYJU’S and its $1.2 billion term loan B (TLB) lenders, along with the delay in filing financial statements for the fiscal year ending March 31, 2022 (FY22), are cited as reasons for the incomplete transaction with Davidson Kempner. The investment firm has reportedly imposed a condition precedent (CP) on the loan, hinging on the filing of BYJU’S financial accounts.
While Davidson Kempner has already transferred two tranches of INR 800 crore to BYJU’S, the full amount is contingent upon certain terms and conditions that the company is working towards meeting, according to sources.
In recent days, the challenges facing BYJU’S have intensified, putting immense pressure on the embattled company. Last week, three early backers and board members, including GV Ravishankar, MD of Peak XV Partners (formerly Sequoia Capital India), Russell Dreisenstock of Prosus, and Chan Zuckerberg Initiative’s Vivian Wu, resigned from the board.
Furthermore, Deloitte recently resigned as the statutory auditor of BYJU’S, citing the delay in releasing the financial statements for FY22.
In addition to these issues, BYJU’S has faced allegations of delayed provident fund (PF) payments for employees since October last year. However, following a directive from the Employees’ Provident Fund Organisation (EPFO), the company has now remitted the PF dues for the period spanning August 2022 to May 2023.
Despite these challenges, a Delaware Court rejected a plea against BYJU’S filed by its TLB creditors, seeking an investigation into the transfer of $500 million from BYJU’S Alpha, its US-based subsidiary, to other entities.
In the midst of these ongoing struggles, BYJU’S is reportedly in advanced discussions with new investors for a $1 billion fundraise, which could provide a much-needed boost to the company’s operations.
