EdTech giant Byju's, engaged in a dispute with its US lenders, decided to make a bold move.
India’s most valuable startup, the $22 billion (1,81,698. 33 crore) valuation Byju’s, has decided to disqualify its US-based lender accusing it of “predatory tactics”. The EdTech giant skipped $40 million (Rs 330 crore) payments on a $1.2 billion loan and instead filed a lawsuit against investment management firm Redwood. The $40 million in interest was due on Monday, June 5.
Making the bold move, Byju’s said in a statement that it had decided against making further payments on the $1.2 billion so-called term loan B (TLB). Byju’s also informed that it had filed a suit in the New York Supreme Court in the US. Byju’s has stated that it will not be making any further payments on the loan, including interest , until the dispute is resolved in court.
Byju’s vs US lender
Billionaire Byju Raveendran’s global edtech unicorn has been attempting to strike a deal with lenders in order to restructure the loan. Byju’s is in a tight spot financially after the online tutoring boom during the pandemic dwindled. On the other hand, long-running negotiations were scrapped by creditors as they demanded accelerated repayment. Lenders even attempted recovery via the courts.
Byju’s has claimed that the US company purchased a significant portion of the loan while primarily trading in distressed debt. This was contrary to the conditions of the term loan facility, it said. Byju’s further said that the lenders unlawfully accelerated the loan due to certain alleged non-monetary and technical defaults in March. The lenders undertook enforcement measures including seizing control of its US unit -- Byju's Alpha and appointing its management, which Byju’s has termed unwarranted.
Byju’s US entities BYJU'S Alpha and Tangible Play were sued by lender GLAS Trust Company and investor Timothy R Pohl for moving out $500 million from BYJU'S Alpha. Both entities are part of Byju’s parent Think and Learn Private.
Byju’s had said last month that it hadn’t defaulted on loan repayment to US lenders. $500 million worth of loans were transferred from Byju’s US entities to fund growth plans, it added. Byju’s has said that the entire loan stands disputed now. It, however, said that the company remains open to discussions with TLB lenders. Byju’s is ready to continue with payments under the TLB if the creditors withdraw their “ill-conceived actions and honour the terms of the agreement,” it said.
"BYJU'S cannot be expected to and has elected not to make any further payment to the TLB lenders, including any interest, until the dispute is decided by the court. As conveyed to the TLB lenders, BYJU'S remains financially robust with significant cash reserves," Byju’s said.
(Inputs from PTI)
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