According to the souces, Indian online education provider Byju's is looking to restructure its $1.2 billion loan as it struggles with steep losses and cost-cutting targets. The nation's most valuable startup, valued at $22 billion, has appointed an adviser to discuss changes to the term loan B covenants with creditors.
Discussions on more lenient terms, such as a lower coupon and more time to repay, are ongoing, according to one of the people, who did not provide further details.
The loan, which was priced at 550 points over Libor in November of last year, is one of the largest unrated term loan B offerings ever made by a new-age economy company in the world, and it received strong demand from investors such as sovereign wealth funds. According to Madhur Agarwal, managing director at JPMorgan Chase & Co, one of the deal's bookrunners.
On Wednesday, the loan was trading at 80 cents on the dollar, up from a record low of 64.5 cents in September.
The 150 million-user startup has faced a number of challenges, including a shortened fund raising, regulatory pressure, and a much-delayed filing of audited financial statements that revealed a 13-fold increase in losses for the fiscal year ended March 2021 — the most recent period for which financial accounts are available.
Byju's announced in October that it would lay off 2,500 employees, or about 5 per cent of its total workforce, and reduce marketing and sales costs in order to become profitable by March. Moreover, according to the media reports, the company is in talks with advisers for a $1 billion initial public offering of its tutoring business Aakash Educational Services to bolster its balance sheet.