Byju's holds call with over 100 investor representatives on audited results, Term Loan B

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Edtech firm Byju's' founders, top executives, and advisory council held a call with over 110 investor representatives on August 14, where they updated them on the progress of its Term Loan B negotiations, audited results, among other issues, according to sources.

Byju's move to update investors comes at a time when India's most valued edtech company has been battling multiple fires, from a missed deadline to rework loan terms, to delays in filing its audited numbers, and a protracted fundraising process.

One of the sources cited above said founder Byju Raveendran and CFO Ajay Goel gave an update on what will be a 'defining quarter' for the company as it gets its house in order. Mohandas Pai and Rajnish Kumar, who are part of the firm's advisory council, expressed confidence in the business.

"It was a very reassuring call. Byju said the TLB (term loan B) conversation should wrap by month end and that the talks with Davidson Kempener too are progressing well. They said the audited results for FY22 should be ready by end of September and FY23 by the end of the year," a person who was part of the call said.

Some of the investors who were on the call included representatives from firms such as General Atlantic, Peak XV Partners, Prosus, and Chan Zuckerberg Initiative, among others. Byju Raveendran did not immediately respond to a request for comment.

Byju’s has also brought on board Richard Lobo, the former head of HR at Infosys, in what marks a significant appointment at the embattled edtech firm. Lobo will be an exclusive advisor to help transform its HR function.

The move follows Byju’s ongoing troubles with its employees. The edtech major has so far laid off at least over 5,000 employees while delaying appraisals, provident fund payments and holding back incentives of employees for this year.

Onboarding Lobo will be a significant move for the startup as he comes with over 23 years of experience at Infosys where he has held various leadership roles, most recently as the executive vice president and head of human resources.

Byju's had raised $1.2 billion in debt via term loan B (TLB) in November 2021 from a clutch of overseas investors.

In March, the lenders first accelerated the TLB on account of certain alleged non-monetary and technical defaults and later in May, the lenders sued the company's wholly-owned subsidiary Byju's Alpha Inc in the Delaware Court on allegations of hiding $500 million from them.

A few weeks later, Byju's sued the lenders in the New York Supreme Court, challenging the acceleration of the TLB. It also skipped paying $40 million in interest that was due post the acceleration. Since then, the two parties have had multiple calls to reach an amendment.

The probable amendment was seen as a key milestone in the negotiations and a delay in reaching an amendment could make it even more difficult for Byju's to raise new funds, which it needs to tide over an immediate liquidity crunch.

Already, Davidson Kempner, a US-based investor, which lent Byju’s $250 million in structured instruments in May, held back close to $150 million as the company’s talks with its lenders did not progress well.

Further, Byju’s also had a technical default on the Davidson Kempner loan, prompting 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 is now exploring a fundraising from one of its earliest backers, Ranjan Pai, for Aakash Educational Services. Pai is expected to buy out a part of Raveendran’s stake in Aakash, Moneycontrol reported earlier this week. Raveendran holds close to 30 percent stake in Aakash.

Byju's has been actively engaged in a substantial fundraising campaign since the start of the year. However, they have encountered difficulties in concluding the funding round. As a result, the company had to resort to implementing several cost-cutting measures, including laying off more than 2,000 employees, deferring appraisals, and giving up office spaces.