The nation's most valuable startup, valued at $22 billion, has hired an adviser to negotiate changes to the term loan B covenants with creditors.
What is happening: People familiar with the situation say that Byju's, an Indian online education provider, is looking to restructure its $1.2 billion loan as it struggles with steep losses and cost-cutting targets.
Creditors are concerned about the company's ability to repay and have reduced loan amounts in many cases.
Further details: Given the surge of more than 21 times, the three-month Libor has resulted in the loan becoming costlier for the firm.
Further, after the parent company Think and Learn Pvt Ltd. failed to get rated, it resulted in the margin on the loan has increased by 50 basis points.
About the loan: The loan, priced at 550 points over Libor in November last year, is one of the largest unrated term loan B offerings ever from a new-age economy company worldwide.
As per reports generated by Bloomberg, the loan is currently trading at 80 cents on the dollar after touching a record low of 64.5 cents back in September.
Background: 2022 has not treated Byjus well and has made the startup face several hurdles.
A truncated fundraising, regulatory pressure, and a much-delayed filing of audited financial statements that disclosed a 13-fold jump in losses for the year ended March 2021 being few of the major ones.
The shedding of 2500 workers, about 5% of its total workforce back in October not aiding Byjus in protecting its image and reputation either.
Conclusion: So far there are no official reports or statements from Byjus themselves, but those familiar with the workings along with close monitoring of the trends indicate that Byjus is having difficulties in navigating the tough winds ahead. The 1.2 million dollar loan is their biggest worry at the current moment.
