Kempner reviews $250 million loan to edtech firm Byju’s amid crises

Davidson Kempner Capital Management is not fully disbursing a $250 million loan to educational technology company Byju’s while the US hedge fund reviews its lending decision in light of the escalating crisis at the company, according to people familiar with the matter.

The people, who asked not to be named, said the fund, which manages more than $38 billion, has provided less than half of the $250 million convertible debt it offered the startup, as some loan agreement covenants were not met. The information is not public.

The company is reviewing its decision on lending after the company lost its auditor and three board members in the same week, raising questions about its accounting practices.

The US company’s decision to withhold funds poses a new problem for the company, which is trying to boost investor confidence with a proposed $1 billion fund raise. Byju also skipped payments on a $1.2 billion term loan and sparked a legal battle with creditors seeking faster repayment.

Spokesmen for Davidson Kempner and Peugeot declined to comment.

The company, which was valued at $22 billion in its most recent funding round, has run into trouble since it missed several deadlines to file audited financial accounts. The company has also laid off thousands of employees as it seeks to cut costs.

Representatives of three influential backers — Peak XV, Prosus NV and the Chan-Zuckerberg Initiative — resigned from Byju’s board the same week Deloitte Haskins & Sells stepped down as its auditor, underlining a rapid erosion of confidence within the company’s ranks.

First published: June 28, 2023 | 11:32 p.m ist