India’s most valuable startup, Byju’s, is expected to pay a quarterly interest payment of nearly $40 million on a $1.2 billion loan by the instalment deadline of June 5. This is the largest underrated loan taken by a startup ever. A failure to pay the instalment would mean a default on the loan. 

There has been a significant decline in the company’s profit after the online tutoring boom during the pandemic. This is also why the company has been negotiating with the lenders to restructure the loan. 

The creditors have signed a cooperation agreement that chains them to act together in negotiations. The consortium decided to accelerate the repayment, scrapping the long-running talks. 

In September, the load had slumped to a low of 64.5 cents a dollar. It has increased from then and is now quoting at 78 cents. 

The lawyers of the Byju Raveendran-led company believe making a coupon payment on time will help the company get enough time to wait for “a large capital infusion” to pay down the loan. 

According to the firm, the company is current on all debt payments, and any defaults should be considered technical breaches of the loan agreement.

The company has previously missed deadlines to submit financial reports for the year ending on March 31, and the Indian agency that looks into infractions of the country’s foreign exchange laws searched its offices.