Byju's Faces Financial Squeeze: Epic Sale Funds Eyed To Steer Through Financial Turbulence

In the midst of facing a significant financial strain, Byju's, the beleaguered edtech company, is contemplating ways to address its cash crunch. According to several sources well-acquainted with the situation, the firm is now considering the possibility of allocating funds from the anticipated sale of its unit, Epic, to ensure the continued viability of operations at Think & Learn.

Byju's has garnered three bids totaling approximately $400 million for Epic. According to the current proposals, the company is expected to utilize at least $80-100 million from the transaction, reserving the remaining amount for term loan B (TLB) lenders, as per a report by the Economic Times.

The company urgently seeks deal finalization and fund transfer, exploring financing options, with tech-focused buyout firm Joffre in the lead.

Last week, Byju's notified its employees of a revised notice period, now ranging from 15 to 30 days, contingent on seniority, as opposed to the previous duration of 15 to 60 days.

Byju's is resorting to various urgent measures to survive, especially as the company approaches its annual general meeting scheduled for December 20. Some investors have called for founder Byju Raveendran to step back from the day-to-day operations of the company.

"The company is currently in need of funds. Discussions are ongoing with TLB creditors regarding the proceeds from the Epic sale, and the consensus is to allocate approximately $300-320 million for them," an individual familiar with the matter told ET.

During the cash crunch, Byju's valuation dipped below $3 billion in the first half, marked down from the March valuation of $5.1 billion by investor Prosus. Investors, including BlackRock, marked down Byju's multiple times, with the lowest valuation slightly above $8 billion.

On November 21, show cause notices were issued by the Enforcement Directorate (ED) to Byju's and Raveendran for violations amounting to Rs 9,362.35 crore under the Foreign Exchange Management Act (FEMA). A statement from the company a week later emphasized its ongoing commitment to complete adherence to all relevant FEMA regulations.