More trouble for Byju’s as lenders say lawsuit is ‘meritless’
Earlier, during its US entity Byju’s Alpha issue, the company had said that it entered into the Term Loan B agreement with the clear intention of utilising the raised funds to drive growth.
Published: 10th June 2023 08:03 AM | Last Updated: 10th June 2023 08:03 AM | A+A A-
Image used for representational purpose. (Photo | BYJU'S YouTube Screengrab)
BENGALURU: The group of ad-hoc term lenders says Byju’s lawsuit against them is simply an effort to avoid complying with its obligations, including making contractually required payments. They collectively own over 85% of Byju’s $1.1 billion term loan. Edtech firm Byju’s had filed a complaint in the New York Supreme Court to challenge the acceleration of the $ 1.2 billion TLB (Term Loan B) and also sought to disqualify Redwood, an investment management firm.
The edtech firm has elected not to make any further payments on a $1.2 billion TLB, including any interest until the dispute with lenders is decided by the court. The company skipped $40 million interest on the loan. All these issues are expected to affect Byju’s future plans, as the edtech company will launch the initial public offering (IPO) of its subsidiary Aakash in mid-2024.
“The lender group, comprised of 21 highly respected global institutional investors, has sought to work constructively with the company over the past nine months to cure its numerous defaults and will continue to do so in good faith. However, in the event BYJU’S intentionally remains in default, the lender group reserves all rights available to it to enforce the credit agreement,” lenders said in a statement.
Byju’s had alleged that a series of predatory tactics were conducted by the lenders, led by Redwood, and that in March this year, the TLB lenders “unlawfully” accelerated the TLB on account of certain alleged non-monetary and technical defaults.
The edtech company is planning to cut 1,000 employees, according to reports, but people familiar with the development denied this. Last year, the company announced that it will retrench 2,500 people in a phased manner. Earlier, during its US entity Byju’s Alpha issue, the company had said that it entered into the Term Loan B agreement with the clear intention of utilising the raised funds to drive growth and expansion in its global operations and is free to transfer and use the funds as necessary.
Lenders own 85% of Byju’s $1.1 bn term loan
These lenders own 85% of Byju’s $1.1 billion term loan. Byju’s had filed a complaint in the New York Supreme Court against the acceleration of the Term Loan B and sought to disqualify Redwood, an investment management firm
