Byju’s lenders scrap talks to restructure $1.2 billion loan
Byju’s, the country’s valuable startup is presently facing a major setback after creditors have withdrawn from the talks to restructure a $1.2 billion loan, stated Bloomberg in its report.
The talks ended after the creditors filed a lawsuit accusing the company of concealing $500 million in funds raised, according to the media report. The Bloomberg report said that since the restriction imposed as part of the discussions has been lifted, lenders are now free to sell the company’s term loan B securities.
According to the media report, the decision presents a new obstacle for one of India’s most popular software companies, which has been attempting to persuade creditors by offering prepayments and higher coupons to restructure the loan.
Despite the fact that the discussions have come to an end due to the steering committee of lenders, one of the persons stated that the company will make an independent effort to contact each lender to renegotiate the terms.
Byju’s has to make an interest payment on the loan by June 5, the people said. The company will get ‘a large capital infusion’ soon that will allow it to pay down the loan, its lawyer said in a US court last month while denying allegations of hiding the funds raised as loan.
The transfer of borrowed funds was in ‘full compliance of loan agreement and did not contravene any terms of the agreed-upon rights and responsibilities,”a Byju’s spokesperson said on Thursday. “Even lenders have not alleged that the transfer was not permitted under parties’ existing contractual arrangement,” the person said.
In response to questions regarding the cancellation of the discussions, representatives for Byju’s and Houlihan Lokey Inc., which creditors hired to provide them with loan restructuring advice, declined to comment.
After missing a deadline to submit audited financial statements, the company offered to renegotiate the deal by raising the coupon on the loan due in 2026 by as much as 300 basis points and prepaying a portion of the debt.
The loan, one of the largest unrated debt raised by a startup ever, slumped to a record 64.5 cents a dollar in September and is now quoted at around 79 cents, according to data compiled by Bloomberg.
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Updated: 01 Jun 2023, 07:00 PM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.