Edtech startup Byju’s has sought more time from creditors to renegotiate an agreement governing a $1.2 billion loan that is in breach of covenants, according to a latest report by news agency Bloomberg.
The creditors have until Tuesday to sign a forbearance agreement, which will give the company time till February 10 to negotiate broader terms on the term loan, the people said, asking not to be identified as the information isn’t public, Bloomberg reported.
A Forbearance agreement is granted by a lender and it is a temporary postponement of loan payments.
The report added that Byju’s is scrambling to appease creditors and investors already concerned about mounting losses at the once high-flying startup. The India-based firm has offered to raise fresh equity capital and provide creditors a so-called quality of earnings report and cash verification statements by external auditors, the people told Bloomberg.
Some of the creditors are seeking quicker repayment of the loan using cash reserves of about $850 million from Byju’s’ US unit after the parent missed a September deadline to disclose the earnings, Bloomberg reported last month.
The loan was indicated at 81.9 cents on the dollar on Monday, according to data compiled by Bloomberg. Lenders who bought the debt from primary holders in September, when the loan slumped to a record 64.5 cents, were seeking to profit from accelerated repayment, people had said previously.
The loan, priced at 550 points over Libor in November 2021, is one of the largest unrated term loan B offerings ever from a new-age company worldwide, according to JPMorgan Chase & Co., one of the deal’s bookrunners.
Reportedly, Byju’s spent over $2.5 billion in 2021 on several acquisitions, recently raised $250 million from existing investors and used it to clear pending dues.