Troubled edtech company Byju’s has sued lender Redwood and its related entities in the New York Supreme Court for accelerating a $1.2 billion Term loan (TLB), calling their demands “high-handed”.

Byju’s also skipped its quarterly interest payment of $40 million due on June 5, saying it will not make any further payments on the loan.

The saga of the term loan, which Byju’s raised in 2021, began late last year, when the edtech company was asked to make an immediate payment after it violated the terms of the loan, which included filing its audited results for March 2022 by September.

ETtech looks at the timeline of how the events unfolded

November 2021: Byju’s raises $1.2 billion via a term loan from the overseas market, up from the $700 million it had planned earlier, to fund general corporate purposes offshore, including supporting business growth in North America. Byju’s took advantage of the interest rate arbitrage available then in the global markets and raised the capital at Libor plus 550 basis points, which was much lower than what was available in the domestic markets.

July 2022: Byju’s issues a statement saying it will soon announce its latest audited financials. At that time, its audited financial statements for the previous two financial years had not been filed with the Registrar of Companies. The company’s auditor, Deloitte, had reportedly raised concerns about the way the edtech major recognised revenue, delaying the filings.

August 2022: The ministry of corporate affairs sends a letter to Byju’s parent company Think & Learn, asking it to explain the seventeen-month delay in filing audited financial accounts for the year ended March 31, 2021, news wire Bloomberg reports.September 2022: After an 18-month delay, Byju’s finally announces its audited results, where its FY21 revenue from operations was readjusted to Rs 2,280 crore even as it incurred a massive loss of Rs 4,588 crore, around 18 times the Rs 262 crore loss in the previous fiscal year. This marked a significant drop of around 50% from the projected revenue of about Rs 4,400 crore cited in the unaudited results.

October 2022: Byju’s closes a financing round of $250 million from its existing investors, including Qatar Investment Authority (QIA), which led the round with over $100 million. The round included the sale of secondary shares by existing investors of the edtech platform.

December 2022: A group of creditors asks Byju’s to immediately repay part of the TLB as they renegotiate the terms of the debt. The lenders hire Houlihan Lokey Inc. to advise them on amending covenants after the edtech company breached terms, including the September deadline for filing its results for the year ended March 31, 2022.

March 2023: ET reports exclusively that Byju’s offered to increase the rate of interest on its TLB as part of renegotiating debt-financing arrangements. The additional interest was on top of the 550-basis-point Libor plus floating interest rate at which the loan was initially raised.

April 2023: Byju’s lenders seek up to $200 million (about Rs 1,600 crore) in prepayment along with a higher rate of interest from the Bengaluru-headquartered company as a precondition to restructure the TLB.

May 2023: Byju’s closes a Rs 2,000-crore round from Davidson Kempner Capital in a structured credit transaction against the cash flows of its test-prep subsidiary Aakash Educational Services. Byju’s was expected at the time to use some of the new capital to refinance parts of its TLB.

June 1, 2023: Bloomberg reports that Byju’s creditors had pulled out of negotiations with the company to recast the TLB, posing a new setback to the beleaguered tech firm. The talks were called off after the creditors moved court, accusing the firm of hiding $500 million of the funds raised.

June 6, 2023: The edtech company says it has sued the lenders in the New York Supreme Court for accelerating repayment of the term loan, calling their demands “high-handed”. In its suit, Byju’s sought to “disqualify” lender Redwood, which allegedly had resorted to “predatory tactics”, and consistently increased its exposure by acquiring a sizable stake in the TLB with the intent of making windfall gains. Byju’s also did not pay the $40 million quarterly interest due on June 5.

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