dtech Giant Faces Financial Strain as NCLT Bars Use of Rights Issue Proceeds
Edtech behemoth Byju’s has commenced salary payments after a two-month delay, amidst challenges in accessing funds from a recently floated rights issue.
In an email to employees on April 8, Byju’s management announced the initiation of salary disbursements, citing ongoing efforts to secure approval to access rights issue funds. However, the company revealed that it has faced hurdles due to actions taken by four of its investors.
The National Company Law Tribunal (NCLT) has directed Byju’s to hold funds from the rights issue in an escrow account until the resolution of an oppression and mismanagement plea filed by its investors, including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA. This legal dispute revolves around Byju’s decision to raise $200 million at a post-money valuation significantly lower than its previous funding round.
Despite the financial constraints, Byju’s management assured employees of timely payments, mentioning arrangements for alternative lines of credit. This decision follows the company’s announcement to defer staff salaries for the second consecutive month pending NCLT approval.
Byju’s is grappling with financial difficulties, impacting its ability to meet operational expenses and fulfill obligations to stakeholders. Recent legal actions, including an emergency arbitration ruling prohibiting the sale of stake in Aakash Education Services Limited, further exacerbate the company’s challenges.
Amidst these challenges, Byju’s-owned Aakash Education Services Limited has appointed former Pearson India managing director Deepak Mehrotra as its new CEO, signaling strategic leadership changes within the organization.
