Byju’s plan to sell assets, including Great Learning, has stalled amid mounting financial challenges stemming from term loan B (TLB) investor demands and discord with stakeholders, said potential buyers who have been approached. They are waiting in expectation of a lowering of the purchase price, they told ET.

Unlike Epic — which is also on the block — the sale of Great Learning is being overseen directly by its founder Mohan Lakhamraju, along with the TLB investors. Byju’s is seeking around $600 million from sale of the higher education asset but is yet to find a buyer with a binding term sheet.

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It is also yet to get a binding offer for Epic, underscoring troubles facing the Bengaluru-based startup on all fronts.
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The sale of Great Learning is key to repaying Byju’s $1.2-billion loan.
One person who was approached and has seen the proposal, said, “I am not sure how many companies will have $600 million cash to give out to buy any asset, in the current market, especially given the broader issues at the group level. Delaying will ensure a harder bargain amid the crises and, at the same time, there are alternatives available at a lower price.”
Also read | Byju’s seeks $200 million in rights issue at 99% valuation cut

This person said Great Learning’s revenue run rate has also been hit amid the cash crunch at the parent level. “Some universities have also expressed concerns over the conflict with company investors and TLB lenders globally,” the potential buyer said.

A Byju’s spokesperson did not respond to ET’s emailed query.

A cash-and-stock deal remains a thorny issue for the troubled edtech firm. Lenders don’t favour a mix as they are trying to fully recover the loan given to Byju’s. “What will lenders do with stock? They need cash. (But) even for Epic, a better asset, a full-cash deal at $400 million is not an easy task to pull off,” said another person aware of the discussions.

Byju’s was expecting a binding offer for Epic by January but recent developments delayed the transaction. The embattled company, also severely in need of cash, had planned to use some proceeds from the Epic transaction for daily operations, but does not have the option till now.

Also read | For more capital, Byju’s must pass a tough test

The TLB lenders have been up against Byju’s for over a year now, even after they issued a statement in July saying they had agreed to talks to restructure the loan.

Since then, they have not only filed insolvency proceedings in the US and in India, but also mounted the first legal challenge in India against Byju’s parent, Think & Learn, in the Bengaluru civil court, as reported by ET on February 6.

Also read | Ranjan Pai may put $50-60 million more to grow Byju’s Aakash

The lawsuit opposed Manipal group chairman Ranjan Pai’s conversion of debt to equity in Aakash Institute but was rejected by the court.

“Right now, the priority is to close the rights issue, which itself has seen an investor-vs-founder battle play out in public. Everything else is on hold,” said another person briefed on the sale process.

Byju’s floated a rights issue on January 29 at a throwaway pre-money price of $25 million — a 99% discount to Byju’s peak valuation — to raise $200 million.

It has made a group of investors — including Prosus and Peak XV Partners — unhappy as their investments will be wiped out completely if they don’t participate. Their move to have founder and chief executive Byju Raveendran and his family removed from operations was thwarted by the company, which, in a public statement, said they don’t have the right.


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