Byjus, a startup, in the education technology sector based in India is currently experiencing difficulties as a consortium of lenders aims to reevaluate the terms of a loan $1.2 billion. Byju’s recently has faced various challenges such as auditors stepping down failure to meet interest payments, and a decline in demand for its flagship application. Negotiations are ongoing with expectations, for an outcome.
A consortium of lenders associated with Byju’s, an Indian education technology startup, is collaborating with the company to revise the terms of a substantial $1.2 billion loan due to the company’s current financial distress. Sources indicate that a steering committee comprising creditors and representatives from Byju’s aims to reach a mutually agreeable signed agreement before August 3.
The ongoing negotiations bring hope for the company which was formerly India’s most valuable startup. Unfortunately, Byju’s has encountered a series of crises in recent months. Notably, the company’s auditors resigned leading to India’s anti-money laundering officials conducting searches at its offices. Additionally, Byju’s missed an interest payment on its term loan further adding to its financial challenges.
Byju’s business initially boomed during the pandemic experiencing exponential growth with its flagship app amassing over 100 million users. However, with the reopening of schools, the demand for online tutoring dwindled. To compound the issue, the startup had heavily invested in marketing initiatives including sponsoring India’s national cricket team and the FIFA World Cup which strained its financial resources.
As of now, the public domain does not include any earnings statement for Byju’s for the financial year ending in March 2022. The most recent available data indicates that expenditures more than doubled in the year ending March 31, 2021, while revenue declined.
Adding to the company’s troubles, just last month Deloitte Haskins & Sells, the auditors for Byju’s, resigned citing a delay in submitting financial statements. This prompted the government to order a thorough inspection of the company’s financial affairs.
In the same month, Byju’s made a significant decision to halt payments on the $1.2 billion term loan and skipped a $40 million interest payment due that day. Additionally, the company filed a lawsuit in New York accusing a group of investors of creating a fake debt crisis to extort money from Byju’s. The lenders’ group has dismissed this lawsuit as baseless and without merit.