Dunzo holds talks with debt investors to rejig credit terms

economictimes.indiatimes.com:

quick commerce startup Dunzo has held talks with its debt investors to restructure the terms of the credit so that the company can avail some of its cash lying in the bank to clear pending dues to vendors and staff salary arrears stretching to two months, sources aware of the discussions said. The talks have been underway to finalise new terms, including the payback timelines, people aware of the talks said. Dunzo’s efforts come at a time when it has simultaneously been looking to arrange new capital from both existing and new investors,ET first reported on July 18.

“There is cash in the company but debt obligations with cash flow are relatively stringent compared with equity investors. Dunzo had to take more debt as the April funding round took longer than expected and it needed capital to run operations,” one of the people mentioned above said. “This is similar to the PharmEasy situation where certain debt covenants, once breached, can restrict a firm’s ability to access its available cash.” In November, Dunzo had made regulatory filings about closing a financing of around $6 million debt from Blacksoil.

Sources, however, said the company has raised more debt since then. “The information on the debt restructuring is inaccurate and we cannot respond to rumours without specifics. Our business operates with a healthy mix of debt and equity based on the best efficiencies,” a spokesperson for Dunzo said.

The statement said its business has turned ‘contribution margin positive’ without giving any specifics and that it is seeing ‘interest’ from investors in ‘different forms of capital’. Emails sent to Reliance Retail, its largest investor with a 26% stake, did not elicit any response until the publication of this report. ET