Online-education unicorn Byju’s is seeking to restructure its $1.2 billion loan as it battles multifold losses and cost-cutting targets, according to a Bloomberg report. The report cited people familiar with the information saying that the company has appointed an adviser to discuss tweaks in covenants of the term loan B with creditors.
Discussions on more lenient terms, including lower coupon and more time to repay, are continuing and no final decision has been reached, one of the people said.
Byju’s is India’s most valuable startup, valued at $22 billion. The startup grow with India’s developing mobile connections and attracted many overseas investments. But this growth trajectory declined due to excessive cash burn.
The latest report says that the creditors are getting concerned about the company’s ability to repay and many have sold down the loans. The three-month Libor has surged more than 21 times this year, making the loan costlier for Byju’s. The margin on the loan was raised by an additional 50 basis points this year after its parent company, Think & Learn Pvt., failed to get rated.
Madhur Agarwal, managing director at JPMorgan Chase & Co. had said that 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 and received strong demand from investor including sovereign wealth funds.
According to Bloomberg, the loan is trading at 80 cents on the dollar on Wednesday after touching a record low of 64.5 per cents in September.
Byju’s has been struggling on multiple fronts, including curtailed fundraising, regulatory pressure, and delayed financial statements that revealed a 13-fold rise in losses for the year ended March 2021.
In October this year, Byju’s said that it would cut about 5 per cent of its workforce. As the company tries to become profitable, it is lowering marketing and sales costs. It was previously reported that Byju’s is planning to list its wholly-owned subsidiary Aakash Educational Services.