The company, instead, termed the investors’ move as conspiracy. “We would emphasise that the shareholder’s agreement does not give them the right to vote on CEO or management change,” Byju’s said in a statement on Friday.
In a separate e-mail to employees, the company’s management said that the founders are the ‘largest investors and the greatest fighters’ for Byju’s. “When investors hesitated to step up during harsh macroeconomic conditions, the founders personally invested over 1 billion dollars in capital to keep our dream alive….certain investors, seeing the crisis we faced, saw it as an opportunity to conspire and demand the stepping down of our founder as the group CEO of Byju’s,” they said in the mail which was reviewed by TOI.
The cash-strapped startup which failed to disburse salaries for the month of January to employees on time blamed the situation on the “artificially induced crisis” by the select investors. The management claimed that the salary disbursements will be paid in a phased manner and completed by Monday and added that Raveendran had pledged his only house to ensure salary payments to employees over the past several months. Byju’s said that since the launch of its $200 million rights issue on January 29, the firm has received commitments for more than 100% of the proposed amount. “It will ensure we have enough growth capital and also to meet all operational liabilities. This will mark the beginning of the final phase of our recovery,” the management told employees.
Once valued at $22 billion, Byju’s is seeking funds from existing investors by way of a right issue at a valuation of $225 million-$230 million. The company which is mired in a dispute with its term loan lenders over repayments of its $1.2 billion loan revealed consolidated losses of more than Rs 8,000 crore in much delayed filings last month. “TLPL (Byju’s parent company Think & Learn) has been turning around the business, cutting the monthly burn to near operational breakeven and working on an AI-led technological refresh soon. In context, the actions of some unnamed investors are disruptive at a highly challenging time,” the startup said even as investors have expressed concerns over the future stability of the company under the current leadership.
In a separate development, the company’s US subsidiary Byju’s Alpha has filed for bankruptcy in a US court after it defaulted on $1.2 billion debt. According to the website of the Bankruptcy Court in the district of Delaware, the Chapter 11 petition (a type of bankruptcy filed by companies which involve a reorganisation of their assets and debt) was filed on February 1. To be sure, in November last year, the Delaware Chancery Court while recognising that Byju’s defaulted on its loan obligations allowed the group of term lenders to remove Riju Ravindran as the sole director of Byju’s Alpha and replacing him with their own representative Timothy R. Pohl.
Citing court filings made by Pohl, Bloomberg reported that Byju’s Alpha doesn’t have enough funds to keep fighting with its parent company about the debt. Byju’s Alpha listed assets of at least $500 million and liabilities of at least $1 billion in its bankruptcy petition.