Jobaaj Stories
Byju's, the renowned Indian education startup, is facing a dispute with its lenders over a $1.2 billion loan, which has led to the company halting further payments. The conflict raises concerns about the future of Byju's, one of India's most successful startups.
On June 6, Byju's announced that it had filed a complaint regarding the loan with the New York Supreme Court. The lenders have not received a $40 million interest payment due on Monday, indicating the growing tension between the two parties.
Byju's stated that since legal proceedings are ongoing in Delaware and New York, the entire term loan B (TLB) is now disputing. Consequently, the company has decided not to make further payments, including interest, until the court resolves the dispute.
Reports suggest that Byju's tried to make attempts to restructure the loan after the pandemic through negotiations with its lenders. However, the creditors are pushing for prompt payment and are no longer interested in continuing the prolonged discussions.
The dispute has impacted the issue of loans, which dropped from 78 cents on June 2 to 64.375 cents on the dollar on Monday. It indicates growing concerns among investors about the company's financial stability.
Byju's, founded in 2015 by former teacher Byju Raveendran, became India's most valuable startup by meeting the rising demand for online education and making several acquisitions. It secured investments from prominent firms like Tiger Global Management, Chan Zuckerberg Initiative, Silver Lake Management, and Naspers Ltd. The company even reached a valuation of $22 billion and considered going public through a merger with a special-purpose acquisition company (SPAC) last year.
Byju's emphasized that its decision to withhold interest payments does not reflect financial difficulties. The company remains financially boomed with significant cash reserves and is open to discussions with the TLB lenders.
— Harshita Kumar
Must read, Is Byju's Set to Make Final $40 Million Payment on Unrated Loan
