BYJU’S, the Indian edtech decacorn, has reportedly offered to increase the interest rate on its $1.2 billion term loan B (TLB) as it renegotiates its debt-financing arrangements. Sources cited by the Economic Times suggest that the company might finalise the new debt structure with a 200-250 basis point increase in interest rate. The term loan is due in 2026, and the interest rate change does not imply a default at BYJU’S end. Byju Raveendran, the company’s founder, is reportedly directly involved in the renegotiation talks.
BYJU’S raised the TLB in November 2021 at Libor plus a floating interest rate of 550 basis points, and is now looking to increase the interest rate to take the total floating interest rate to 750-800 basis points. The development comes after reports last December that the edtech major was looking for more lenient terms on the loan. Days after that, media reports suggested that some creditors asked BYJU’S to repay the loan faster, looking for a profitable exit at the time.
The renegotiation and creditors asking for a quicker payment have been prompted by a delay in posting financial year (FY) 21 financials and the continued delay in posting FY22 financials. Reporting FY22 financials by September-end was one of the requirements in the TLB agreement, Inc42 reported. After a delay of 1.5 years, the edtech major filed its 2020-21 financial statements on September 14. It is interesting to note here that its FY22 financials too have been delayed for about a year now. It was reported that there are still no clear timelines for FY22 results, which has raised questions among all stakeholders.
While BYJU'S aims to negotiate to restructure its debt, it is looking to raise up to $500 million via convertible notes. The edtech closed a $250 million funding round from existing investors such as Qatar Investment Authority in October 2022, during which it had started conversations around raising another $500 million.