- March 2, 2024
Byju’s unable to pay salaries as funds locked: Founder Raveendran – Times of India
MUMBAI: Byju Raveendran, founder and CEO at troubled edtech startup Byju’s hit out at a group of investors, stating that their move to disable the company from using the funds raised through the rights issue has hindered disbursement of salaries to employees. “….I regret to inform you that we will still be unable to process your salaries…..Unfortunately, a select few (4 out of our 150+ investors) have stooped to a heartless level, ensuring that we are unable to utilise the funds raised to pay your hard-earned salaries,” Raveendran said in a letter to employees on Saturday which was reviewed by TOI.“At their behest, the amount raised through the rights issue is currently locked in a separate account,” Raveendran said, adding that despite the successful closure of its $200 million rights issue, the company is facing a crisis. Byju’s said that it is making attempts to ensure that the salaries are paid by March 10.
Four of the firm’s investors— Prosus, Peak XV Partners, General Atlantic and Sofina had approached the National Company Law Tribunal (NCLT), seeking a stay on the rights issue, stating that there are serious allegations of siphoning off funds by the company’s promoters and the company is being investigated by the Enforcement Directorate (ED) and Ministry of Corporate Affairs (MCA). Although the court allowed Byju’s to go ahead with the rights issue, it passed an interim order, directing the startup to keep the funds received as part of the rights issue in a separate escrow account. The court also said that the funds should not be withdrawn till the disposal of the oppression and mismanagement suit filed by the investors against the company’s management.
“It is an agonizing reality that some of these investors have already reaped substantial profits – in fact, one of them has made a staggering eight times their initial investment in Byju’s. And yet, their actions convey a callous disregard for our lives and livelihoods,” Raveendran told employees.
The cash starved company had been banking on its rights issue to raise capital and meet its current liabilities. Byju’s will now have to call an EGM (extraordinary general meeting) to seek shareholder approval and increase authorised capital. “Countless hours have been spent exploring every possible avenue, engaging our legal teams, and advocating for your rights. However, despite our best efforts, we are left with no option but to confront the heart-wrenching reality that we are temporarily unable to provide you with the financial support you deserve,” Raveendran said.
Byju’s is locked in a bitter fight with its investors, majority of whom also voted to oust Raveendran as the CEO and restructure the firm’s family-run board.
Four of the firm’s investors— Prosus, Peak XV Partners, General Atlantic and Sofina had approached the National Company Law Tribunal (NCLT), seeking a stay on the rights issue, stating that there are serious allegations of siphoning off funds by the company’s promoters and the company is being investigated by the Enforcement Directorate (ED) and Ministry of Corporate Affairs (MCA). Although the court allowed Byju’s to go ahead with the rights issue, it passed an interim order, directing the startup to keep the funds received as part of the rights issue in a separate escrow account. The court also said that the funds should not be withdrawn till the disposal of the oppression and mismanagement suit filed by the investors against the company’s management.
“It is an agonizing reality that some of these investors have already reaped substantial profits – in fact, one of them has made a staggering eight times their initial investment in Byju’s. And yet, their actions convey a callous disregard for our lives and livelihoods,” Raveendran told employees.
The cash starved company had been banking on its rights issue to raise capital and meet its current liabilities. Byju’s will now have to call an EGM (extraordinary general meeting) to seek shareholder approval and increase authorised capital. “Countless hours have been spent exploring every possible avenue, engaging our legal teams, and advocating for your rights. However, despite our best efforts, we are left with no option but to confront the heart-wrenching reality that we are temporarily unable to provide you with the financial support you deserve,” Raveendran said.
Byju’s is locked in a bitter fight with its investors, majority of whom also voted to oust Raveendran as the CEO and restructure the firm’s family-run board.
