The interest proposed by Byju’s works out to 11.0-11.5% at least, they said. This may even change as the terms have not yet been finalised and the two sides were still continuing their discussions this week, the people added.
Also read | Byju’s, Davidson Kempner in talks to settle dispute
“This would increase the total pay-out annually by about $50-60 million,” a person aware of the matter said, adding that creditors are yet to sign off on this.
“The question is how the financing of the additional interest pay-out would be done. This is higher than the initial offer from (founder) Byju Raveendran,” this person said.
Also read | Davidson Kempner sends legal notice to Byju’s arm Aakash for loan covenant breach
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Freezing the new terms for the term loan B (TLB) has been one of the key pain points for the Bengaluru-based Byju’s for the past few months. It has been working to secure new funds, but troubles related to test prep subsidiary Aakash Institute, TLB lenders as well as statements from investors like Prosus on corporate governance issues at the company have affected the process, multiple sources said.Last month, creditors who own more than 85% of the $1.2 billion TLB, issued a statement that they have agreed to work with the edtech firm to finalise the new terms by August 3. However, no announcement has since been made on an agreement.
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Another person aware of the discussions said Byju’s and the lenders are expected to share a formal proposal later this week to expedite closing of new terms for the TLB.
An email sent to Byju’s did not elicit any response till press time Tuesday.
Byju’s raised the TLB in November 2021 at a Libor plus floating interest rate of 550 basis points (5.5 percentage points). The additional interest rate being discussed by Byju’s is on top of the 550 bps. ET first reported on March 20 that Raveendran had offered an increased rate of around 200 bps, but creditors did not agree to it.
Also read | Byju’s misses $40 million loan payment, sues term loan lender Redwood
A Bloomberg report last week, citing Byju’s lawyer, said lenders also made “bogus default claims” linked to the TLB and that the same was part of a “scheme to gain control of the education-technology provider”.
Meanwhile, Byju’s and New York-based investor Davidson Kempner Capital (DK) have begun negotiations to settle their dispute over the breach of a loan covenant linked to the edtech company’s test preparation subsidiary, Aakash Institute, ET reported on August 8.
Byju’s has offered DK to repay the funds it has so far availed of from the sanctioned loan of Rs 2,000 crore, along with the interest on that amount. DK, however, is seeking interest on the entire amount for a period of one-two years, ET reported.