Edtech company BYJU’s three-year deal with the world’s leading footballer Lionel Messi as global brand ambassador has been put on hold, as reported by a leading business daily in India. The development came just a year after the company signed the deal with the footballer. In November 2022, it was reported that BYJU’s had officially announced that the company had roped in the football great Lionel “Leo” Messi as its first global brand ambassador of its social impact arm ‘Education for All’.
BYJU’s in its official statement had said that Messi who played for Paris Saint-Germain and captained the Argentinian football team had signed an agreement with the company to promote the cause of equitable education. However, a year down after this deal was made, it is now reported that the three-year deal has now been put in hold. Reportedly, Lionel Messi had been roped in for an estimated $5-7 million per year.
An executive of the company has been quoted as saying that though BYJU’s paid Messi for the first year, there is now the strong likelihood that the deal will be terminated before the full term, and that the company may not revive the contract further in due course.
“This is on account of the liquidity crisis and other matters of serious concern within the company,” one of the executives said. There hasn’t been any response from BYJU’s yet though the CEO of the company has admitted that “the struggle was even bigger this time” referring to payment of January’24 salaries to employees.
Shah Rukh Khan’s Endorsement Contract Not Renewed In 2023
The company has not renewed its endorsement contract with Bollywood actor Shah Rukh Khan as well, after it ended in mid-2023. According sources, this was a mutual decision as the movie star Khan too did not want to be associated with the platform given its constant regulatory scrutiny.
Troubles Aplenty For BYJU’s
As per another report by a media house in the USA, a unit of BYJU’s, once considered India’s most- promising edtech companies, was put into bankruptcy in the US by a court-appointed agent who took it over after it defaulted on $1.2 billion in debt.
In January this year, the majority of lenders who were part of $1.2 billion Term Loan B (TLB) secured by BYJU’s filed an insolvency petition with NCLT (National Company Law Tribunal) Bangalore against the company.
BYJU’s then termed the development as “premature and baseless”.
According to the report, the case was filed through GLAS USA, which represents over 80 percent of lenders that were part of the TLB, granted by institutional lenders instead of banks.
The development came when BYJU’s claimed to be negotiating with the TLB lenders to settle the entire debt by raising funds from the sale of a couple of subsidiaries.
Regarding the petition, a company spokesperson said, “As stated before, the validity of lenders’ actions, including acceleration of the term loan, is pending and under challenge in several proceedings, including before the New York Supreme Court. Hence, any proceedings by lenders before NCLT are premature and baseless.”
BYJU’S took the Term Loan B in 2021 when interest rates were low. However, the lenders contested transferring $500 million from BYJU’S US-based subsidiary BYJU’S Alpha to other entities in a Delaware court.
The edtech major also approached the New York Supreme Court to challenge lenders’ demand to immediately pay $1.2 billion and disqualify one of the lenders, Redwood.
BYJU’s remains committed to a constructive dialogue with the lenders, said the spokesperson.
Bengali