Pai to extend ₹300 crore loan facility to Byju’s parent

Mumbai: Ranjan Pai, the founder of Manipal Hospitals Group, has offered a 300 crore financial facility to Byju’s parent, Think & Learn Pvt. Ltd, as part of a broader transaction that is expected to facilitate a partial exit for the Chaudhry family from Aakash Educational Services Ltd, two people with knowledge of the deal said.

Pai’s total investment in the group might reach $300 million if all the pieces of the deal fall in place, one of the people cited above said. Some parts of the deal are still being negotiated, the people cited above said.

The short-term financing of 300 crore will help plug Byju’s working capital and cash flow requirements, the two people cited above said, requesting anonymity.

Byju’s has, in the past few months, worked at cutting back on senior management employees to reduce its working capital needs. On 26 September, Mint reported it was letting go of 4,000 employees to save costs.

Pai’s investment in the group will largely help repay a loan taken by the group from US-based investor Davidson Kempner at onerous terms against the cash flows of Aakash Educational Services.

Davidson Kempner offered a loan of 2,000 crore in May this year but has transferred only 800 crore to the online tutor eventually. The full loan was not extended after it emerged that Think & Learn breached certain covenants by escalating litigation with its overseas term loan lenders.

Pai’s investment into Aakash will help repay this 800 crore back to Davidson Kempner, along with 600 crore in interest, potentially resolving a thorny issue for the company.

More significantly, this transaction will also see Aakash’s founding family swap a part of their Aakash shares into Think & Learn.

The Chaudhry family agreed to sell Aakash to Byju’s in January 2021 for over $950 million in cash and shares. But the share swap never happened for two years, and following the parent entity’s struggles with the lenders, auditors and investors, the Chaudhry family declined to swap their shares with the parent Think & Learn, Mint reported on 1 August.

“Now, a settlement is being worked out,” one of the people cited above said.

One part of the settlement could see a part of Chaudhry’s shares being swapped with Think & Learn, which could potentially take the company’s stake in Aakash to over 51%, the person cited above said.

A spokesperson for Davidson Kempner declined to comment, while Byju’s did not respond to queries on Sunday. Aakash Chaudhry and Ranjan Pai also did not respond to requests for comments on Sunday. Meanwhile, Byju’s is due to present its financial results for FY22 next week.

Byju’s has also moved to settle an outstanding $1.2 billion loan which it raised from overseas lenders in November 2021. To help with the repayment, it is working on the sale of two assets, Epic and Great Learning, Mint reported in September.

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Updated: 15 Oct 2023, 11:35 PM IST