A group of ad hoc term loan lenders have responded to a recent lawsuit filed in a US court by edtech giant Byju’s, calling it ‘meritless’. These lenders collectively own more than 85 per cent of Byju’s $1.2 billion term loan.
“Byju’s’ meritless lawsuit against its term loan lenders is simply an effort to avoid complying with its obligations, including making contractually required payments,” the group said in an e-mailed statement from New York.
The statement comes soon after Byju’s filed a complaint against acceleration of $1.2 billion term loan B (TLB) and to disqualify Redwood as a lender.
Byju’s, which provides services to more than 150 million students around the world, has not paid $40 million in interest due Monday on the $1.2 billion loan.
“The lender group, comprised 21 highly respected global institutional investors, has sought to work constructively with the company over the past nine months to cure its numerous defaults and will continue to do so in good faith.
However, in the event Byju’s intentionally remains in default, the lender group reserves all rights available to it to enforce the credit agreement,” it said.
Houlihan Lokey serves as financial adviser to the term loan lender group and Kirkland & Ellis LLP, Cahill Gordon & Reindel LLP, and Shearman & Sterling LLP are serving as legal advisers.
The edtech firm has said that the lenders in March have unlawfully accelerated the loan due to certain alleged non-monetary and technical defaults, adding that the lenders undertook unwarranted enforcement measures, including seizing control of its US unit — Byju’s Alpha and appointing its management.
Byju’s, which had been trying to strike a deal with creditors to restructure the loan, said it has chosen not to make further payments, including interest until the dispute is decided by the court.
US-based investment management firm BlackRock, which is a minority investor in the unicorn, recently slashed its valuation by 61.9 per cent in the quarter ended March this year to $8.36 billion.
The edtech major, meanwhile, may see another round of layoffs as it looks to manage operating cost.