NEW DELHI: Responding to the recent lawsuit filed by troubled edtech startup Byju’s in the New York Supreme Court, a group of ad hoc term loan lenders, who collectively own more than 85% of the firm’s $1.2 billion term loan on Thursday said that the lawsuit is ‘meritless’ and simply an effort to avoid complying with its obligations, including making contractually required payments.
“The lender group, comprising 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,” they said in a statement late Thursday night.
Houlihan Lokey serves as financial advisor to the term loan lender group and Kirkland & Ellis LLP, Cahill Gordon & Reindel LLP, and Shearman & Sterling LLP are serving as legal advisors.
Earlier this week, Byju’s skipped a deadline to make a $40 million quarterly interest payment on its $1.2 billion loan and instead filed a suit in the New York Supreme Court to challenge acceleration of the $1.2 billion term loan B (TLB) and to disqualify lender Redwood who the firm alleged, purchased a significant portion of the loan while primarily trading in distressed debt with the intent of making windfall gains. Byju’s said that “a series of predatory tactics” undertaken by the lenders, led by Redwood pushed it to make such a move.
The company which has of late been grappling with a spate of challenges, however said that it is willing to continue making payments under the TLB if the lenders withdraw their ill-conceived actions and honour the terms of the agreement.
“While originally attracted to the investment opportunity, the lenders’ relationship with (Byju) Ravindran (who owns and controls, directly or indirectly, the loan parties) has been marred by the loan parties’ troubling disregard for their contractual obligations and a series of broken promises to remedy the breaches caused by their disregard. For example, over the past year, Think and Learn (parent company of Byju’s) has repeatedly failed to, and continues to be unwilling to, provide the Lenders with bargained-for consolidated financial data and required or otherwise promised guarantees and collateral,” the lenders said in their court filing.
They added that Byju’s still has not only failed to produce audited financial statements for the fiscal year ended March 31, 2022, which were originally due no later than September 27, 2022, but has also repeatedly failed to furnish complete, unaudited financial statements for multiple fiscal quarters. “As a result, the lenders’ most recent audited, and thus verified, financial information on a billion-dollar-plus loan facility is more than two years outdated (that information was for the fiscal year ended March 31, 2021). The Lenders do not even have the complete unaudited financial statements to which they are entitled,” they said.
The lenders had last month taken the edtech startup to court, accusing the firm of hiding $500 million through its US-based subsidiary Byju’s Alpha, a non-operative entity set up to receive the TLB.
“The lender group, comprising 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,” they said in a statement late Thursday night.
Houlihan Lokey serves as financial advisor to the term loan lender group and Kirkland & Ellis LLP, Cahill Gordon & Reindel LLP, and Shearman & Sterling LLP are serving as legal advisors.
Earlier this week, Byju’s skipped a deadline to make a $40 million quarterly interest payment on its $1.2 billion loan and instead filed a suit in the New York Supreme Court to challenge acceleration of the $1.2 billion term loan B (TLB) and to disqualify lender Redwood who the firm alleged, purchased a significant portion of the loan while primarily trading in distressed debt with the intent of making windfall gains. Byju’s said that “a series of predatory tactics” undertaken by the lenders, led by Redwood pushed it to make such a move.
The company which has of late been grappling with a spate of challenges, however said that it is willing to continue making payments under the TLB if the lenders withdraw their ill-conceived actions and honour the terms of the agreement.
“While originally attracted to the investment opportunity, the lenders’ relationship with (Byju) Ravindran (who owns and controls, directly or indirectly, the loan parties) has been marred by the loan parties’ troubling disregard for their contractual obligations and a series of broken promises to remedy the breaches caused by their disregard. For example, over the past year, Think and Learn (parent company of Byju’s) has repeatedly failed to, and continues to be unwilling to, provide the Lenders with bargained-for consolidated financial data and required or otherwise promised guarantees and collateral,” the lenders said in their court filing.
They added that Byju’s still has not only failed to produce audited financial statements for the fiscal year ended March 31, 2022, which were originally due no later than September 27, 2022, but has also repeatedly failed to furnish complete, unaudited financial statements for multiple fiscal quarters. “As a result, the lenders’ most recent audited, and thus verified, financial information on a billion-dollar-plus loan facility is more than two years outdated (that information was for the fiscal year ended March 31, 2021). The Lenders do not even have the complete unaudited financial statements to which they are entitled,” they said.
The lenders had last month taken the edtech startup to court, accusing the firm of hiding $500 million through its US-based subsidiary Byju’s Alpha, a non-operative entity set up to receive the TLB.
