In a latest twist to BYJU’S ongoing financial challenges, overseas lenders who collectively extended more than 85% of the company’s $1.2 billion Term Loan B (TLB) have lodged an insolvency petition against the embattled edtech firm. The bankruptcy filing was submitted to the Bengaluru bench of the National Company Law Tribunal (NCLT) earlier this week, intensifying the legal battle between BYJU’S and its international lenders.
However, BYJU’S has responded to the insolvency petition, dismissing it as premature and baseless. In an official statement, the edtech company asserted that the validity of the lenders’ actions, including the acceleration of the term loan, is currently under challenge in various proceedings, including those before the New York Supreme Court. BYJU’S also highlighted ongoing proceedings in Delaware appellate courts related to the guarantee issue by Whitehat Education Technology Pvt. Ltd, a wholly-owned subsidiary of Think & Learn, stating that any such guarantee would violate existing RBI regulations.
This development follows earlier reports that BYJU’S proposed a complete repayment of the $1.2 billion TLB to its lenders within six months. The edtech major suggested repaying $300 million of the distressed debt within three months, with the remaining amount to be settled in the subsequent three months, contingent on the acceptance of its amendment proposal. However, negotiations between BYJU’S and its TLB lenders to alter the loan repayment terms have failed over the past year.
Facing financial challenges, BYJU’S is now contemplating raising $100 million to $200 million through a rights issue, significantly marking a nearly 90% valuation cut compared to its peak $22 billion valuation in 2022.
Despite these troubles, BYJU’S CFO Nitin Golani has indicated that the edtech startup is seeking to raise capital in the range of $7 billion to $8 billion during its upcoming rights issue in February. The financial struggles of BYJU’S have been compounded by board member exits, increasing losses, and staff layoffs.
Earlier this month, the company released its financial statements for FY22, revealing a consolidated net loss spike of 81%, reaching INR 8,245.2 crore from INR 4,564.3 crore in FY21. Operating revenue, primarily driven by the improved performance of Aakash, surged over 120% year-on-year to INR 5,014.6 crore during the fiscal year.
