NCLT Maintains Curbs On Byju's Usage Of Funds From $200 Million Rights Issue
The matter is now listed for its next hearing on July 4.
The Bengaluru bench of the NCLT, in a fresh order, has maintained the curbs it placed on beleaguered edtech Byju's, restricting it from using funds raised from a $200 million rights issue.
In an order dated June 12, an NCLT bench comprising MSS Sundaram and Manoj Kumar Dubey ordered that Byju's will not issue shares or use funds raised from the second rights issue until the tribunal says otherwise or the matter is disposed of.
NDTV Profit has seen a copy of the order.
The tribunal has also asked Byju's to disclose the shares issued and money received from the first rights issue.
According to people with knowledge of the matter, Byju's first rights issue was to raise $200 million, but it was unsuccessful and the entire issue was not subscribed to. This led to the company starting a second rights issue of $100 million, meant to plug the deficit from the first issue.
In January, Byju’s floated a $200-million rights issue to help raise emergency funding. Opposing investors such as Peak XV Partners, Chan-Zuckerberg Initiative, Prosus and General Atlantic did not take part in that issue.
The money was being raised at a pre-money valuation in the range of $20–25 million, which is a 99% reduction from its peak valuation of $22 billion. It is not clear when exactly the second rights issue was floated.
The matter is now listed for its next hearing on July 4.
Apart from the investor battle, another legal showdown between its lenders and Byju's has been ongoing since 2022, shortly after Byju's Alpha Inc. was established as a US subsidiary of Byju's to receive the proceeds of the term loans. It defaulted on the lenders' term loan in 2022 when it failed to provide the required unaudited quarterly financial information on time.
Since then, after months of unsuccessful attempts at negotiation, lenders have turned up the heat against Byju's, accelerating the term loans, taking control of the pledged equity in Byju's Alpha, replacing Riju Raveendran with a restructuring professional, and dragging Byju's to the Bengaluru bench of the NCLT.
