Byju’s Founder Clarifies Use of $1.2 Billion Loan for Business Expansion

In a recent disclosure to the US Bankruptcy Court, Byju Raveendran, founder of the troubled edtech giant Byju’s, has defended the use of the company’s $1.2 billion term loan obtained from US lenders. Raveendran explained that the funds were deployed for global expansion, including marketing, acquisitions, and setting up offices in seven new countries.

Global Expansion Fueled by Loan Proceeds

Raveendran revealed that over $200 million of the loan was allocated to marketing and branding for Byju's international ventures, while around $300 million was used to cover losses in Tangible Play, the firm’s North American vehicle for expansion. The aggressive expansion strategy included multiple global acquisitions and establishing a presence in new markets.

Initially, Byju’s had planned to raise $500-750 million, but due to strong demand, the loan amount was increased to $1.2 billion. Raveendran emphasized that all major decisions related to the loan were fully endorsed by existing investors.

Challenges with US Lenders and Financial Pressure

The disclosure comes amid ongoing legal disputes with US lenders, who have demanded immediate repayment of the $1.2 billion loan, claiming that Byju's has failed to make any contractual payments for over 17 months. Raveendran pointed out that just as Byju’s was about to see returns on these strategic investments, the company faced a liquidity crunch due to broader financial market changes, including the US Federal Reserve's shift in monetary policy and rising interest rates.

The situation worsened when a committed $700 million equity investment fell through, as the investors did not fulfill their obligations despite signing binding agreements.

Legal Disputes and Allegations

The US lenders, represented by Glas Trust Co LLC, have raised concerns over Byju’s settlement with the Board of Control for Cricket in India (BCCI) for Rs 158 crore, alleging that the payment was tainted. Raveendran strongly denied the allegations, calling them "defamatory" and "patently false," asserting that no funds were siphoned from the loan.

On September 26, India’s Supreme Court temporarily halted all insolvency-related meetings for Byju’s as Glas Trust challenged its removal from the edtech firm’s committee of creditors (CoCs). The dispute over Glas Trust’s role in the CoCs stems from a ruling by Byju’s interim resolution professional, who argued that Glas Trust did not represent the minimum 51% of lenders in the loan consortium.

Several legal proceedings are still pending. The National Company Law Appellate Tribunal (NCLAT) has adjourned the case between Byju’s and its US lenders to November 6, while a separate matter between Byju’s investors and its parent company, Think & Learn Pvt Ltd, has been pushed to November 18 by the National Company Law Tribunal (NCLT), awaiting the Supreme Court’s decision.