Byju’s Disqualifies US Lender for ‘Predatory’ Techniques, Skips Payment on $1.2 Billion Loan
According to the education technology firm, Byju’s has omitted payments due on a $1.2 billion loan and instead rejected the US lender for “predatory” practices.
Byju’s filed a lawsuit against investment management company Redwood, alleging that it violated the terms of the term loan facility by buying a significant amount of the loan while predominantly dealing in distressed debt.
More than 150 million students worldwide get services from Byju’s, which failed to make the USD 40 million interest payment due on Monday on the USD 1.2 billion loan.
The firm said in a statement on Tuesday that it had chosen not to make further payments on the 1.2 billion USD so-called term loan B (TLB) and that it had launched a lawsuit in the New York Supreme Court.
It further claimed that the lenders took excessive enforcement actions, such as taking control of its US branch, Byju’s Alpha, and selecting its management, in March owing to certain purported non-monetary and technical defaults.
Byju’s, which had been attempting to reach an agreement with lenders to modify the debt, said that it has opted to forgo making any more payments—including interest—until the case is resolved by the court.
Byju’s financial situation deteriorated when the pandemic-era online teaching surge peaked. Lenders, however, terminated further discussions and demanded quicker payment. They even made legal claims for compensation.
The firm claims that despite knowing that the putative acceleration was being contested in court, TLB lenders sent a letter demanding immediate payment of the whole amount owed under the TLB.
Plaintiffs in a case brought by GLAS Trust Company, a lender, and Timothy R. Pohl, an investor, are BYJU’s US-based businesses.
They filed a lawsuit against BYJU’s Alpha and Tangible Play for transferring $500,000,000 out of BYJU’s Alpha.
The two organizations are a part of Think and Learn Private, which is BYJU’s parent company.
Byju’s said last month that loans obtained from American lenders had not fallen behind on repayment and that loans totaling USD 500 million had been moved from the group’s US subsidiaries to support expansion ambitions.
BYJU’S claimed that the whole TLB is in doubt since legal actions are already underway in both Delaware and New York.
Byju’s said that if the TLB lenders remove their “ill-conceived actions and honor the terms of the agreement,” Byju’s is willing to continue paying payments under the TLB.
GLAS Trust Company, the lender’s agent, did not respond right away to an email asking about the situation.
“BYJU’S cannot be expected to and has opted not to make any more payments, including interest, to the TLB lenders until the legal issue has been resolved by the court. BYJU’S remains financially sound with significant cash reserves, as represented to the TLB lenders, the business claimed.
Davidson Kempner Capital Management, a US-based investment firm, provided BYJU’s with USD 250 million in debt financing last month. Negotiations are ongoing to garner an additional USD 700 million from other investors.
According to the firm, on March 3, the TLB lenders improperly expedited the TLB due to a number of claimed non-financial and technical defaults and conducted unjustified enforcement actions, including taking control of BYJU’S Alpha and selecting its own management.
The TLB lenders attempted, but failed, to deny BYJU’S its legal authority to “disqualify” lenders that engage largely in opportunistic trading in the Delaware proceedings, according to BYJU’s.
The Delaware court rejected this effort, saying that the TLB lenders “have not demonstrated either irreparable harm or the balance of the harms as required to support a provision restraining” this contractual right of BYJU’S, the business stated.
According to BYJU’S, the TLB lenders’ agent even refused to provide it access to the names of the TLB lenders, as it is required to do by the TLB, and the lenders have repeatedly taken actions to damage BYJU’S image.
