Byju’s, the world’s most valuable edtech company, has extended the timeline for settling the dues of laid-off employees from September to November. This move comes as the company grapples with a liquidity crunch, owing to lender commitments and an ongoing fundraise effort.
In June, Byju’s initiated a significant downsizing effort that affected approximately 1,000 employees across various departments, including mentoring, logistics, training, sales, post-sales, and finance. Byju’s characterized this move as a strategic step toward achieving profitability.
At the time of the layoffs, affected employees were informed that they would receive their salaries for both June and July, along with additional incentives, as part of their final settlements by September 15. However, on September 14, the company notified these employees via email of a delay in disbursing their dues. According to the new timeline provided in the email, employees can now expect to receive their outstanding payments by November 17. Moneycontrol has verified the copies of these emails.
The email stated, “This is to inform you that the full and final settlement amount will be released latest by 17th November 2023. We are sorry for the inconvenience caused.”
This development occurs as Byju’s commits to repay its entire outstanding amount to lenders within the next six months, all while trying to secure funding for a long-pending fundraising round.
Byju’s recently submitted a proposal to its lenders, expressing its intention to fully repay its $1.2 billion term loan B within the upcoming six months. Byju’s aims to accomplish this by making an initial payment of $300 million within the next three months.
In pursuit of securing the necessary funds for loan repayment, the company has also opted to undertake a strategic review of its key assets. A source familiar with the situation mentioned that the fundraising plans of the company are progressing as planned, with Middle East-based sovereign wealth funds expressing interest in participating in the funding round.
Additionally, Byju’s is engaged in negotiations with Davidson Kempner, a US-based asset management firm, which extended a $250 million loan to the company in May through structured debt, based on the future cash flows of Aakash Educational Services, Byju’s largest asset. However, approximately $150 million was withheld by the US-based AMC due to the lack of progress in Byju’s negotiations with its lenders.
Furthermore, Byju’s experienced a technical default on the Davidson Kempner loan, prompting Byju Raveendran to raise funds to repay it in order to prevent losing control of his most valuable asset, Aakash Educational Services, which had been offered as collateral for the Davidson Kempner loan.
Founded over a decade ago by former teacher Raveendran, Byju’s reached new heights in March 2022 when it raised a massive $800 million funding round at a valuation of $22 billion, becoming India’s most valued startup.
However, the company has faced numerous challenges since then, including delayed financial results, the resignation of its auditor Deloitte, and the departure of three key board members, including those from Sequoia Capital India, Prosus, and the Chan Zuckerberg Initiative.
Byju’s has also faced criticism for employee-related issues, such as delayed provident fund payments, significant layoffs, and the withholding of incentives.
Nevertheless, the company has been actively working to rebuild its reputation amid these challenges. It has enlisted industry veterans TV Mohandas Pai and Rajnish Kumar to advise its board on operational matters and appointed Infosys veteran Richard Lobo as its head of human resources to address employee-related concerns.
