Byju’s, one of the most valuable startups, is facing financial difficulties and is planning to make a quarterly interest payment of approximately $40 million on a loan that has been causing significant problems for the company.

According to insiders who preferred to remain anonymous, Byju’s intends to meet the June 5 deadline by making the payment, but the situation is still uncertain, and plans could potentially change. Failure to pay the amount by the specified date would result in defaulting on the $1.2 billion loan.

Despite requests for comment, Byju’s has not responded regarding the coupon payment. Houlihan Lokey Inc., a firm hired by the creditors to offer guidance on the loan, has declined to provide any comments on the matter.

Bangalore, July 22,2019: Byju Raveendran poses for a picture in his office in Bangalore. Byju Raveendran, from Azhikode, a coastal village in Kerala, was an engineer with a UK-based shipping company when he began helping a few friends crack the entrance test to the IIMs using his shortcuts. He aced the test himself, scoring 100 percentile, but did not join any of the IIMs. Starting with small groups of students he graduated to teaching from large auditoriums and stadiums, and then via VSAT. He launched Byju’s-The Learning App in 2015. Byju’s is now looking to expand to the US, UK, South Africa and other African and Commonwealth markets. It is already present in the Middle East. (Photo by Jyothy Karat)

This $1.2 billion debt is the largest loan ever taken by an unrated startup. Byju’s, previously a flourishing company under the leadership of former teacher Byju Raveendran, has been grappling with financial challenges due to the decline in demand for online tutoring after the pandemic-induced boom.

The company had been attempting to negotiate a loan restructuring deal with its creditors. However, negotiations came to an end when the creditors, demanding an accelerated repayment, terminated the ongoing talks. It has been reported by Bloomberg that the consortium of lenders has entered into a cooperation agreement, binding them to collectively act during negotiations.

The loan’s value had fallen to a historic low of 64.5 cents per dollar in September but has slightly recovered and is currently valued at around 78 cents, as per Bloomberg’s data.

By making the coupon payment on time, Byju’s would buy itself some time and flexibility while waiting for a substantial capital infusion. The company’s legal representatives have stated that this infusion will be used to repay the loan.

Byju’s emphasizes that it has been punctual in meeting all its debt obligations, and any defaults should be regarded as mere technical breaches of the loan agreement, according to the company’s perspective.

Apart from the loan issues, Byju’s has encountered various additional challenges. Firstly, the company failed to meet the deadlines for filing its financial accounts for the period ending on March 31. This non-compliance with reporting requirements raises concerns about the transparency and accuracy of Byju’s financial information.

Furthermore, Byju’s offices were recently searched by the agency responsible for investigating violations of foreign exchange policies within the country. The reasons behind this search are unknown, but it indicates that the company is facing scrutiny from regulatory authorities. Such investigations can potentially have a negative impact on Byju’s reputation and business operations.

These events add to the overall turbulence surrounding Byju’s financial situation and raise questions about the company’s governance and compliance practices. Investors and stakeholders may become increasingly cautious and skeptical about the company’s ability to manage its affairs effectively.

Overall, alongside the loan troubles, Byju’s is grappling with missed financial filing deadlines and being subjected to a search by the agency responsible for foreign exchange policy violations. These challenges further complicate the company’s financial predicament and raise concerns about its transparency and regulatory compliance.

In conclusion, Byju’s, a prominent startup in the edtech industry, plans to make a quarterly interest payment of around $40 million on a loan that has contributed to the company’s financial troubles.

The loan, valued at $1.2 billion, is the largest ever taken by an unrated startup. Byju’s had been engaged in negotiations with creditors to restructure the loan, but those talks were discontinued when creditors demanded an accelerated repayment.

Making the coupon payment by the deadline would provide Byju’s with some breathing space, as it awaits a substantial capital infusion to pay down the loan. The company asserts that it has been timely in meeting all debt payments, and any defaults should be considered technical breaches. Additionally,

Byju’s has faced challenges such as missed financial filing deadlines and a search of its offices by the foreign exchange investigation agency. The situation remains uncertain, and the company’s plans may still change in the coming days.

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