Byju's Financial Feud with Lenders: A Timeline of Key Events

Byju's, the world's most valuable edtech start-up, faces a financial feud with lenders, leading to a series of consequential actions.

Byju's, the world's most valuable edtech start-up, is in news over the past few months due to its financial feud with lenders of its $1.2 billion term loan B (TLB). This situation escalated when Byju's defaulted on its repayment obligations, leading to a series of consequential actions, which have attracted global attention.

Here's a timeline on the key events so far:

November 2021: The $1.2 Billion TLB

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Byju's successfully secured a $1.2 billion TLB from a consortium of lenders in the United States, intending to use these funds to accelerate the company's growth and expansion plans. However, this financial injection would soon become a bone of contention between the start-up and its lenders.

September 2022: Delay in Filing Financial Disclosures

After a delay of 18-months in filing its audited financial reports, the company posted a record loss of Rs 4,588 crore. The company reported a total revenue of Rs 2,280 crore, which had been adjusted down by 50 percent from the projected revenue of about Rs 4,400 crore that was reported in the unaudited financial disclosure.

October 2022: Raising $250 million from existing investors

A few months later after revealing its growing losses, the company successfully managed to raise a new trance of $250 million from existing investors. The investment round included the sale of secondary sales by existing investors.

December 2022: Creditors asks Byju's to immediately repay part of the TLB

Having breached various provisions of their TLB, including the delayed posting of financial results, a group of creditors asked for immediate repayment of the loan in lieu of renegotiating the lending contract.

January 2023: Request for Time Extension

Early into the year, Byju's found itself breaching covenants of the loan. This led the company to request an extension from its lenders, hoping to renegotiate the terms of the loan agreement.

March 2023: Failure to Disclose Financial Results

Byju's, already under financial scrutiny, failed to meet its deadline for disclosing audited financial results for the fiscal year ending March 31. This failure exacerbated the already tense situation with its lenders. In response, group founder Byju Raveendran voluntarily offered to raise the interest rate on the company’s loans by around 200-300 bps. However, the lenders and the startup were unable to come to any agreement.

April 18, 2023: Lenders Demand Prepayment

As a response to the continued financial irregularities, the lenders demanded a prepayment of $200 million. They also proposed a higher interest rate for the restructured TLB, further increasing the financial burden on Byju's.

June 2023: Lawsuit Against Lenders

In response to the rapidly escalating situation, Byju's opted for a legal recourse. The company filed a lawsuit against its lenders, accusing them of "high-handed" and exploitative practices, which it believes were an abuse of their power and position. The lawsuit came a single day after the deadline for Byju’s to make its payments to lenders.

Alongside the lawsuit, Byju's targeted Redwood Capital Management, a notable TLB holder. The edtech start-up disqualified Redwood on the grounds that they were primarily trading in distressed debt, which Byju's argued was contrary to the TLB agreement terms.

Amid this escalating financial and legal tussle, Byju's made a bold move to not make any further interest payments until the conclusion of the lawsuit. This move further raised the stakes in the ongoing dispute.

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