Byju’s breached $42 million loan terms, small stake sale blocked: Report
Byju’s has been asked by an arbitrator to not sell the shares of a group firm after it breached terms of loans worth $42 million, according to a report by Reuters citing a confidential order.
This comes at a time when the edtech startup has already been struggling with allegations of mismanagement by several of its investors and auditors.
The startup, which was once valued at $22 billion, has seen its valuation fall sharply after a series of exits by auditors, investigations by regulators and allegations by investors. Byju’s, however, continues to deny any wrongdoing.
It is now valued at around $250 million, a steep fall of 99 per cent from its peak.
In the latest dispute, Ranjan Pai’s MEMG Family Office initiated arbitration proceedings against Byju for allegedly not repaying its loan through a pre-agreed transfer of shares of its company, Aakash Education.
According to the Reuters report, an arbitrator, appointed under Singapore International Arbitration Centre rules, has ordered Byju’s not to dispose of 4 million shares of Aakash Education, which amounted to a 6 per cent stake last year, as per the loan agreement according to the April 4 order.
A “case of breach of the loan agreement” has been made out, Ritin Rai, the emergency arbitrator, wrote in his order, Reuters reported.
Byju’s did not respond to Reuters request for comment.
Reuters, citing a source close to Byju’s, reported that the order is not detrimental to the owner and that the ed-tech company is in talks with MEMG to resolve the matter.
According to the order accessed by Reuters, Byju’s during the arbitration proceedings, had said it could not obtain necessary approvals from certain investors in time for the transfer of shares.
In an internal memo last month, Raveendran had said that the ed-tech firm hasn’t been unable to pay its staff “because it can’t access recently raised funds due to a legal dispute with some of its investors”.
In February, a US unit of Byju filed for Chapter 11 bankruptcy proceedings in a court in Delaware, listing liabilities in the range of $1 billion to $10 billion.
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Published: 05 Apr 2024, 05:17 PM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.