Byju’s puts footballer Lionel Messi’s million-dollar deal on hold: Report

In November 2022, it was reported that BYJU’s had announced that the company has roped in football star Lionel “Leo” Messi as the first global brand ambassador of its social impact arm ‘Education For All’.

In an official statement back then, BYJU’s had said that Messi played for Paris Saint-Germain and captains the Argentinian football team. He had signed an agreement with BYJU’s to promote the cause of equitable education.

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However, a year after this deal, the Economic Times reported that the three-year deal has now been put in hold. Messi, the soccer star, had reportedly been roped in for an estimated $5-7 million per year.

The report quoted an executive as saying that Byju’s paid Messi for the first year, but it is yet to be decided whether the deal will be terminated before the full term, or whether Byju’s plans to revive the contract in due course.

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“This is on account of the liquidity crisis and other matters of serious concern within the company,” one of the executives said. There hasn’t been any response from Byju’s yet.

The company didn’t renew its endorsement contract with Bollywood actor Shah Rukh Khan as well, after it ended in mid-2023. According to the report, industry executives said this was a mutual decision as Khan too did not want to be associated with the platform given its constant regulatory scrutiny.

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Byju’s troubles

As per a Bloomberg report, a unit of Byju’s, once one of India’s hottest tech startups, was put into bankruptcy in the US by a court-appointed agent who took over the shell company after it defaulted on $1.2 billion in debt.

On January 25 this year, the majority of lenders who were part of $1.2 billion Term Loan B (TLB) secured by BYJU’S filed an insolvency petition with NCLT Bangalore against the company, news agency PTI had reported citing sources.

BYJU’S then termed the claims as “premature and baseless’.

According to the PTI report, the case was filed through Glas Trust Company, which represents over 80 percent of lenders that were part of the TLB loan – which is granted by institutional lenders instead of banks.

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The development came when BYJU’s claimed to be negotiating with the TLB lenders to settle the entire debt by raising funds from the sale of a couple of subsidiaries.

On the petition, a BYJU’s spokesperson said, “As we have stated before, the validity of lenders’ actions, including acceleration of the term loan, is pending and under challenge in several proceedings, including before the New York Supreme Court. Hence, any proceedings by lenders before NCLT are premature and baseless.”

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BYJU’S took the Term Loan B in 2021 when interest rates were low. However, the lenders contested transferring $500 million from BYJU’S US-based subsidiary BYJU’S Alpha to other entities in a Delaware court.

The edtech major also approached the New York Supreme Court to challenge lenders’ demand to immediately pay $1.2 billion and disqualify one of the lenders, Redwood.

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The spokesperson had said that ByJU’s remains committed to a constructive dialogue with the lenders

(With inputs from PTI)

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Published: 05 Feb 2024, 04:07 PM IST