Indian Startup Byju's To Restructure $1.2 Billion Loan Amidst Steep Losses

One of the most valuable Indian startups, Byju's, plans to restructure its $1.2 billion loan while dealing with cost reduction targets.

According to Bloomberg, the online education firm Byju's is attempting to renegotiate its $1.2 billion debt as it struggles with doubling losses and cost-cutting goals. The company has reportedly hired a consultant to meet with creditors and propose changes to the term loan B's covenants.

Byju's has been having difficulties on many different fronts, including limited fundraising, regulatory pressure, and delayed financial statements that disclosed a 13-fold increase in losses for the year.

As of now, discussions on more forgiving terms, such as lower coupons and longer repayment terms, are still ongoing, and no decision has been made.

What Is the Indian Startup Company Byju?

Under the direction of former teacher Byju Raveendran, Byju's has recently gone on a shopping binge in the US and other countries, purchasing businesses that provided coding lessons, professional learning courses, and test preparation for difficult Indian exams.

After schools and tutoring facilities were forced to close their doors due to the Covid-19 pandemic, forcing parents, teachers, and students to look for alternative learning resources, the popularity of online classes skyrocketed in India of almost 1.4 billion people with one of youngest populations in the world, according to Business Standard.

Byju's has also increased the number of products it offers, including one-on-one tutoring for students in the US, UK, Brazil, Indonesia, Mexico, and Australia by teachers in India and other countries.

Why Is Byju's One of the Most Valuable Startups in India?

With a $22 billion value, Byju's is the most valuable startup in India. The firm expanded along India's growing mobile infrastructure and attracted significant foreign investment. However, this growth trajectory slowed down due to excessive cash use.

Byju's is one of the startups that benefited from the expansion of mobile connections in India and foreign investments up until its explosive growth trajectory was halted by excessive cash burn.

ABP Live reports that many creditors have sold down their loans because they are worried about the company's ability to make payments.

Byju Deals With Steep Losses and Cost Reduction Targets

Byju's announced in October of this year that it would reduce its workforce by about 5%, according to a past report by Tech Crunch. The company is reducing marketing and sales expenses as it works to turn a profit. It was previously reported that Byju's plans to list its wholly-owned subsidiary Aakash Educational Services.

Additionally, a 13-fold increase in losses was reported for the year ended March 2021, the most recent period for which its financial accounts are available, for the closely held startup, which has 150 million users. The startup has been battling multiple headwinds, including incomplete fundraising, regulatory pressure, and a delayed filing of audited financial statements.

Representatives from Byju's have declined to comment when asked if the company was in contact with lenders to discuss the loan terms.