Subject: Glas Trust Claim
From: Interim Resolution Professional Think and Learn P Ltd <[email-masked]>
To: Pankaj Srivastava <[email-masked]>
Cc: "[email-masked]" <[email-masked]>, "[email-masked]" <[email-masked]>, Renu Kochar <[email-masked]>
Date: Wed, 31 Jul 2024 12:03:46 +0400

Dear Sir,

The Credit and Guaranty Agreement between Glas Trust, Byjus Alpha Inc and Think & Learn Pvt Ltd was executed on 24th November, 2021. BYJU's Alpha Inc. borrowed $ 1.2 billion under this agreement and Think and Learn Private Limited has provided guarantee for the said loans. The guarantee of the loan has been capped to 115% of the principal outstanding.
Claim amount
 
Glas Trust (being the Administrative agent and collateral agent) has submitted the claim on behalf of the lenders where they have claimed $1,367,940,737.5 (INR equivalent – INR 1,14,32,98,87,753). The claim amount is unsecured. In one of the attached document (E, F & G), the disbursement amount net of discount is confirmed by Riju Ravendran on behalf of Byjus Alpha Inc.
 
We have not received the excel sheet providing details of the back-up of interest rate. The loan document provides for the below interest rate -
 
Term loans comprising each ABR borrowing shall bear interest at ABR + Applicable Rate

 
Alternate Base Rate:
 
For any day, a rate per annum equal to the greatest of:
 
a. Prime Rate in effect of such day (Prime rate  means rate of interest last quoted by The Wall Street Journal as the Prime Rate or, if it ceases to give esuch quote, highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519)
 
b. NYFRB Rate in effect of such day plus 1/2 of 1%
 
NYFBR Rate is the higher of:
 
(i) Federal Funds Effective Rate in effect on such day
 
(ii) Overnight Bank Funding Rate in effect of such day
 
c. Adjusted LIBOR  for a month interest period on such date (if not a business day then previous business day) +1%
 
(With respect to any EuroDollar Borrowing for any Interest Period, an interest per annum (rounded to next 1%) equal to the LIBOR of such interest period * Statutory Reserve Rate; if such rate is less than .75% then it will deemed to be .75%

 
Applicable Rate:
 
For any day, with respect to any
 
(i)ABR Term Loan:
4.50%
(ii)EuroDollare Term Loan:
5.50%
If the Parent Guarantor fails to obtain the Credit Ratings by the date falling 9 months after the effective date (Section 4.1), then Applicable rate:
 
(i)ABR Term Loan:
5.00%
(ii)EuroDollare Term Loan:
6.00%

Plus 2% in case of default

Prime rate itself has been in the range of 3.25% - 8.5% in the last 2 years + Applicable rate of say 4.5% (on the conservative side) + Default rate of 2%. Even if we consider a rate of 8% (ideally it should be close to 15%, given the definition of interest), the $1.2b would itself become $1.47b till 16th July, 2024 from the funding date of 24th November 21. The guarantee was capped at 115% of the principal amount and hence the amount of claim of $1.38b seems to be justified. We can admit the claim basis the logic provided and we will continue to follow-up for the interest calculation for our documentation and verification.
 
RBI approval
RBI approval for providing guarantee by T&L for the loans of Byjus Alpha Inc was obtained on 29th March 2022. (Refer document H)
 
Event of default –
The following events triggered the Event of default clause under the Credit agreement which led to Glas filing its claim for the Corporate Debtor. Such events have been mentioned in para 7 of the Claim form (Refer document Glas Claim) –
Whitehat India failing to accede to the Credit Agreement and Onshore guarantee  on or before 1st April 2022
Audited financials – T&L failing to provide audited consolidated financials statements on or before 27th September 2022
Quarterly unaudited financials – By the 75th day after the end of each fiscal year of T&L, T&L was required to furnish its unaudited financial statements for that fiscal quarter and the-then elapsed portion of the fiscal year to Glas, along with comparative figures for the prior fiscal year. This requirement was also not fully adhered to.
 
International Court Proceedings
Within few months of executing the Credit Agreement, in March and April 2022, the Loan Parties failed to satisfy at least two of those loan covenants, both of which, among other defaults, entitled GLAS and the Lenders to accelerate the Term Loans and exercise remedies, which they ultimately did on March 3, 2023.
 
On March 16, 2022, T&L failed to furnish required unaudited consolidated financial statements for Q3 FY 2021-2022, and (ii) Whitehat Education Technology Private Limited (“Whitehat”), failed to guarantee the Term Loans by its deadline of April 1, 2022.
 
Basis the court ruling, it is clear that the Delaware Court of Chancery eventually held that the Whitehat default, constituted a valid “Event of Default” under the Credit Agreement, pursuant to which GLAS, on behalf of the Lenders, was entitled to exercise remedies. This order is currently being appealed and there is no order to that effect.
 
Also, the New York proceedings have been initiated by T&L and select subsidiaries against Glas. There is no outcome on the NY proceedings yet.
 
We may rely on the order by Delaware Court where they have recognised the default and admit the claim of Glas by virtue of the guarantee given by T&L. In the event there is an adverse order to this effect, we may accordingly change our view.
 
Let us know your thoughts.