A group of creditors to Byju's, India's most valuable startup, asked the company to immediately repay part of a $1.2 billion loan they recently bought into as they renegotiate terms of the debt, Bloomberg reported.
According to the report that cites sources familiar with the matter, the lenders have hired Houlihan Lokey Inc. to advise them on amending covenants after the edtech titan breached terms of the contract.
Byju's is among the crop of startups that thrived on India's growing mobile connections and overseas investments, coupled with the effects of the pandemic. The app, named after and led by former teacher Byju Raveendran, was downloaded 'more than 150 million times' the company said on is website.
The popularity of online classes soared in India by almost 1.4 billion over the past couple of years, with one of the world’s youngest populations. This was after schools and tutoring centres were forced to shut their doors during the COVID-19 pandemic, forcing parents, teachers and students to look for alternative learning resources.
The edtech platform had its blistering growth trajectory cut short by excessive cash burn.
Breach of terms
The startup's team has been reportedly called out for not filing its results by September for the year that ended March, 2021. Economic Times reported that Lok Sabha member Karti Chidambaram asked India's Institute of Chartered Accountants of India (ICAI) to review Byju's books since there were 'red flags' in their financials for the 2020-21 year.
More recently there have been reported discussions on more lenient terms for the loan, including lower coupon and more time to repay. However, no final decision had been reached, one of the people said to Bloomberg last week. These sources added that creditors were getting concerned about the company's ability to repay and many have sold down the loans.