BENGALURU: A day after announcing that tuition chain Aakash will go public in Mid 2024, edtech firm Byju's has now filed a complaint in the New York Supreme Court to challenge the acceleration of the USD 1.2 billion Term Loan B (TLB) and also sought to disqualify Redwood, an investment management firm.
The company alleged that a series of "predatory tactics" were conducted by the lenders, led by Redwood. Byju's had raised the loan in November 2021.
The edtech platform was scheduled to pay USD 40 million in interest against the loan, on Monday. However, Bloomberg reported that it has chosen to default.
Now, the company has elected not to make any further payments to the TLB lenders, including any interest, until the dispute is decided by the court.
In March this year, the TLB lenders "unlawfully" accelerated the TLB on account of certain alleged non-monetary and technical defaults, Byju's claimed.
"On the back of this unconscionable acceleration of the TLB, the TLB lenders undertook unwarranted enforcement measures including seizing control of Byju's Alpha and appointing its own management. Not resting content with this, the TLB lenders (acting through their agent, GLAS Trust Company) commenced litigation in Delaware in an attempt to lend credence to these actions," the country's most valuable start-up said.
Lender GLAS Trust Company and investor Timothy R Pohl filed a lawsuit against BYJU's US-based entities for certain alleged wrongful acts.
They have sued Byju's Alpha and Tangible Play for moving USD 500 million out of BYJU'S Alpha. The two entities are part of Think and Learn Private, the parent of Byju's.
Last month, Byju's refuted allegations of lenders that Byju's Alpha, its US entity, had hidden $500 million.
The company categorically denied allegations and said this is entirely incorrect. "In the Delaware proceedings, the TLB lenders attempted to deprive Byju's of its contractual right to ‘disqualify’ lenders engaged primarily in opportunistic trades. The Delaware court rejected this attempt, ruling that the TLB lenders “have not demonstrated either irreparable harm or the balance of the harms as required to support a provision restraining” this contractual right of Byju's," the company explained in a statement.
It is said that despite this, the TLB lenders issued a notice demanding immediate payment of the entire amount under the TLB.
"Redwood – a lender known to primarily trade in distressed debt – consistently increased its exposure by acquiring a sizable stake in the TLB with the intent of making windfall gains. In the wake of all these actions, Byju's was left with no option but to commence proceedings in New York – the contractually agreed forum – challenging the acceleration," the company said.
Along with this, Byju's has also issued a notice to the Redwood entities disqualifying them. Once such disqualification takes effect, Redwood would be restrained from exercising critical rights under the TLB.
The company also said it remains financially robust with significant cash reserves, and that it is open to discussions with the TLB lenders.
Last month, Byju's raised USD 250 million debt funding from US-based investment manager Davidson Kempner Capital Management and is in discussion to secure an additional USD 700 million fund with other investors.
(With online desk inputs)