Edtech giant BYJU’S has received a major relief as the consortium of lenders that granted it a $1.2-billion Term Loan B (TLB) during its hyper-growth phase, have reached an agreement with the company to amend the loan’s terms.

“The steering committee (the SteerCo) of ad hoc term loan lenders, who collectively own more than 85 per cent of BYJU’S $1.2 billion term loan, today announced that it and BYJU’S have agreed to work collaboratively toward a signed and completed term loan amendment (the Amendment) prior to August 3, 2023,” the consortium said in a statement.

“Successful execution of the Amendment would immediately solve for the loan’s acceleration and end all open litigation while avoiding further enforcement actions,” the statement added.

The TLB availed during the peak of its growth to support an aggressive acquisition spree has been a major pain point for the company even as it fights a plethora problems including severe cash crunch. BYJU’S spent close to $3 billion across 13 deals between 2020-21, and the TLB was raised primarily to bankroll the acquisitions. Now, as growth slows down and equity becomes scarce, the company found itself ensnared in the consequences of its high-risk gamble.

“We are pleased to make progress with BYJU’S toward a completed loan amendment. This announcement is consistent with our stated goal of working constructively with BYJU’S management to protect the value of the franchise. We look forward to completing the loan amendment over the next two weeks and are committed to doing our part to deliver on our agreed upon timeline,” the statement added.

In June, the Bengaluru-based company had initiated legal action in the Supreme Court of the State of New York County of New York against the acceleration of the TLB and the disqualification of Redwood in response to what BYJU’S claims to be a series of predatory tactics employed by the lenders, led by Redwood. The company said the lenders unlawfully accelerated their account and tried to take control over the BYJU’S entity BYJU’S Alpha by appointing their own management at the company.

“On 3 March 2023, the TLB lenders unlawfully accelerated the TLB on account of certain alleged non-monetary and technical defaults. On the back of this unconscionable acceleration of the TLB, the TLB lenders undertook unwarranted enforcement measures including seizing control of BYJU’S Alpha and appointing its own management,” the company said in a statement at the time.

BYJU’S had stopped making further payments towards its TLB, including the interest amount, claiming that the ongoing legal proceedings have led to the loan being disputed.

The consortium responded to the allegations and termed the lawsuit a meritless action to avoid repayment.

Meanwhile, BYJU’S has been battling several issues including the much-needed infusion of fresh capital continuing to be elusive, its valuation taking a hit at the hands of an investor, and the never-ending layoffs further dampening employee morale. Shortly, in an unprecedented move, Deloitte Haskins & Sells, the company’s statutory auditor, resigned and three board members, namely GV Ravishankar of Peak XV Partners, Vivian Wu of Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus, stepped down from the board of Byju’s.

The company in an extraordinary general meeting (EGM) on July 4 announced the creation of a Board Advisory Committee (BAC) and later announced the appointment of former Infosys chief financial officer TV Mohandas Pai and former State Bank of India chairman Rajnish Kumar as its council members. The council will play an important role in mentoring and advising the BYJU’S team including CEO Byju Raveendran, a statement from the company said.

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