Byju’s Faces Salary Delays Amid Investor Battle over Rights Issue

• ByStartupStory     |    April 2, 2024

Byju’s, the prominent edtech giant, has once again found itself in the throes of financial strain, leading to yet another delay in salary disbursements for its employees. The company attributes this setback to ongoing disputes with investors, exacerbating its cash-crunch woes amidst a contentious rights issue.

Body: In a recent communication to its workforce, Byju’s expressed regret over the necessity to defer salary payments, citing actions by certain foreign investors as the cause. These investors, the company asserts, have obtained an interim order impeding the utilization of funds from a successful rights issue. Byju’s laments the disruptive nature of these actions, describing them as misguided and detrimental to the company’s operations.

The National Company Law Tribunal (NCLT) in Bengaluru declined to halt Byju’s extraordinary general meeting (EGM), scheduled for March 29, aimed at increasing its authorized share capital to accommodate a $200 million rights issue. Furthermore, the Karnataka High Court extended an interim stay on the outcomes of a previous EGM, wherein investors sought to remove Byju Raveendran, the company’s founder, from his role as chief executive.

Despite these challenges, Byju’s remains steadfast in its reassurances to employees, urging them to maintain hope and resilience during these trying times. The company highlights its recent triumphs over adversity and expresses confidence in overcoming the current hurdles. Byju’s founder, Raveendran, has extended an olive branch to estranged investors, offering them the opportunity to participate in the rights issue, although prospects of their involvement appear dim.

The rights issue itself presents a significant departure from Byju’s peak valuation, being offered at a staggering 99% discount. Consequently, investors not partaking in the funding risk substantial dilution of their shareholding once the rights issue concludes.

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