Ranjan Pai, the Chairman of Manipal Educational and Medical Group, is willing to invest a little over $300 million in Byju’s India subsidiary - Aakash Educational Services Ltd. - with the company subsequently running independently from Byju’s, two sources close to the development said.
Pai plans to provide $200 million debt and $100 million cash to Aakash initially apart from some working capital, the sources said. The deal would involve bringing in private equity investors along with Pai, the sources said.
Pai would acquire an around 20% stake in Aakash through the deal, the sources said.
Pai is also providing short-term loans of INR 1 billion and INR 2.5 billion to Aakash Educational Services and online education services company Byju’s parent, Think and Learn Pvt Ltd., respectively.
The $200 million debt will partly replace outstanding debt of around INR 12 billion ($144.3 million) from Davidson Kempner which sits at Aakash, the sources said. Davidson Kempner has initiated arbitration proceedings against Aakash, Think and Learn Pvt. Ltd. and the promoters of the company to recover dues, as reported
Aakash issued INR 20 billion ($243.9 million) unrated, unlisted redeemable non-convertible debentures, or NCDs, to Davidson Kempner Capital Management in May, as reported
. Subsequently, on July 1, the debenture trustee for the NCDs sent an event of default notice to the issuer on behalf of Davidson Kempner due to Byju’s significant financial liabilities and alleged cross defaults. Davidson Kempner has disbursed around INR 12 billion out of the total INR 20 billion NCDs, as reported.
Assets Sales to Repay TLB
Meanwhile, Byju's - which is involved in a legal dispute
with lenders to the $1.2 billion term loan B, or TLB, to Think and Learn - is planning to partly repay the lenders through sales of assets, the sources said. The company is in the process of selling its US assets Epic and Osmo to help repay the TLB, the sources said.
Byju’s is also looking to sell another overseas asset - Singapore based Great Learning Pte - which is currently ring fenced by the TLB lenders. Great Learning will be put up for sale once Epic and Osmo are sold, and the loan is paid down, including through use of funds placed in “high security fixed income instruments”, the sources said.
In September, TLB lenders alleged before a circuit court in Florida that the company transferred in 2022 cash aggregating to $533 million - funds that they had understood to be in the borrower’s bank accounts and available for debt service - to “an unproven high-risk hedge fund”, Camshaft Capital Fund, as a possible first step in removing the money from the reach of the lenders, as reported
Byju’s denied the allegations, stating that it had “made investments in a multi-hundred billion dollar fund with high security fixed income instruments. Our (Byju’s) credit agreement with the lenders does not prohibit or restrict the movement or investment of monies disbursed thereunder. There is no requirement for Byju’s to maintain cash as collateral,” as reported.
Ranjan Pai did not respond to requests for comment. A Byju’s spokesperson did not respond to a request for comment.