Byju's has delayed full and final settlements of laid-off employees from September to November, as the world's most valued edtech grapples with a liquidity crunch amid lender commitments and a long-pending fundraise.
In June, the company initiated a significant workforce reduction, that impacted nearly 1,000 employees across various departments, including mentoring, logistics, training, sales, post-sales, and finance. Byju’s said it was a strategic step towards achieving profitability.
At the time of the layoffs, employees were informed that they would receive their salaries for both June and July as part of their final settlements, along with additional incentives, by September 15.
However, on September 14, the company sent an email to the affected employees notifying them of a delay in disbursing their dues. According to the new timeline provided in the email, the employees can expect to receive their outstanding payments by November 17. Moneycontrol has reviewed copies of emails sent.
“This is to inform you that the full and final settlement amount will be released latest by 17th November 2023,” the mail said. “We are sorry for the inconvenience caused.”
"We regret and acknowledge the delays in settling dues of former employees. As we work through a difficult business restructuring, we are committed to meeting all our obligations as soon as possible," a Byju's spokesperson said.
This move comes amid its commitment to repay the entire amount to lenders within the next six months, even as it tries to close a long-pending funding round.
Byju's recently submitted a proposal to its lenders, in which the company expressed its intention to fully repay its $1.2 billion term loan B within the upcoming six months. Byju's aims to achieve this by making an initial payment of $300 million within the next three months.
As part of its efforts to secure the necessary funds for loan repayment, the company has also decided to undertake a strategic review of its key assets. Byju’s has also put upskilling platform Great Learning and book reading platform Epic, up for sale, which would yield the company about $1 billion, Moneycontrol reported.
A source familiar with the development said that the company’s fundraising plans are on track and Middle East-based sovereign wealth funds have shown interest to participate in the funding round.
Besides, Byju’s is also negotiating with Davidson Kempner, a US-based asset management company, which lent it $250 million in May via structured debt, based on the future cash flows of Aakash Educational Services, the edtech giant’s largest asset. However, the US-based AMC withheld approximately $150 million because Byju's negotiations with its lenders did not progress well.
Byju's also had a technical default on the Davidson Kempner loan. This prompted Byju Raveendran to raise funds to repay it, to avoid losing control of his most valuable asset, Aakash Educational Services. Byju's had offered Aakash's shares as collateral for the Davidson Kempner loan.
Byju’s, founded over a decade back by former teacher Raveendran, had soared to new heights in March 2022 after it raised a massive $800 million funding round, at a $22 billion valuation, becoming India’s most-valued startup.
But the company has come under fire since then for a host of issues including delayed financial results, the resignation of its auditor, Deloitte, and three key board members–Peak XV Partners (Sequoia Capital India)’s GV Ravishankar, Prosus’ Russel Dreisenstock and Chan Zuckerberg Initiative’s Vivian Wu.
The company has also come under fire for employee-related issues including delayed provident fund payments, mass layoffs, and holding back of incentives.
However, the company has been looking to rebuild itself from the crisis. It has roped in industry veterans TV Mohandas Pai and Rajnish Kumar to advise its board on operational matters. The company also appointed Infosys veteran Richard Lobo as its human resources head to address employee-related issues.
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