IIFL Finance, a major financial services company, has refuted claims made by edtech giant BYJU’s regarding financial transactions between the two companies. According to IIFL Finance, BYJU’S erroneously listed them as a lender in its audited financial statements for the fiscal year 2020-21 (FY21). This article delves into the details of this dispute and its implications for BYJU’s ongoing challenges with multiple sets of lenders.
Clarification by IIFL Finance
IIFL Finance issued a clarification, asserting that BYJU’s inclusion of them as a lender to the tune of INR 440.77 Crores in its audited financial statements for FY21 was an error on BYJU’S part. IIFL Finance categorically stated that they have never extended any loans to BYJU’s.
BYJU’s Response
Acknowledging the mistake, BYJU’s has described the inclusion of IIFL Finance as ‘inadvertent.’ In an attempt to rectify the situation, BYJU’s sent a letter dated August 23, 2023, to IIFL Finance confirming the error in their financial statements.
BYJU’s Legal Challenges with Lenders
BYJU’s is currently grappling with legal disputes involving two sets of lenders – the Term Loan B (TLB) lenders and Davidson Kempner – concerning a cumulative lending amount of $1.45 billion.
Temporary Relief from TLB Lenders
In a positive development for BYJU’s, its TLB lenders have agreed to postpone their ongoing legal battle in US courts until October 6. This extension provides both parties with an opportunity to explore the possibility of an out-of-court settlement.
The TLB Lawsuit Background
BYJU’s had filed a lawsuit in the New York Supreme Court to prevent TLB lenders from accelerating the closure of its $1.2 billion loan. The lenders alleged that BYJU’s had violated multiple covenants, including the delayed submission of financial statements for FY22. Consequently, they demanded an expedited repayment of the loan.
Negotiations and Restructuring Efforts
In recent months, negotiations between BYJU’s and TLB lenders have revolved around new repayment terms and restructuring the loan. These discussions have included proposals such as upfront payments of $200 million, 12-13% interest, and a restructured tenure of 3-5 years.
Dispute with Davidson Kempner
BYJU’s is also engaged in a dispute with Davidson Kempner, another lender. This dispute pertains to a loan covenant breach by Aakash Educational Services Limited (AESL), the offline test prep arm of BYJU’s.
Resolution Efforts
Both BYJU’s and Davidson Kempner are currently in talks to settle the dispute. BYJU’s has offered to repay the loan along with full interest, but Davidson Kempner is seeking interest on the entire amount for one to two years. Negotiations are focused on determining the exact payout, with a formal proposal expected to be presented by both parties soon.
Additional Investment by Ranjan Pai
In a related development, Ranjan Pai, the chairman of Manipal Group, is reportedly finalizing an $80 million investment in Aakash Educational Services Limited (AESL). This investment may be utilized to repay Davidson Kempner, with Ranjan Pai receiving shares in AESL in return.
In conclusion, the dispute between BYJU’s and IIFL Finance underscores the complexities of financial transactions in the corporate world. As BYJU’s continues to navigate legal challenges with multiple lenders, negotiations and resolutions will play a crucial role in determining the outcome of these disputes.
