Byju's was unable to pay salaries to employees as the funds raised through a recent rights issue have been locked in a "separate account" due to the ongoing dispute with the investors, founder Byju Raveendran said on March 2.
"Unfortunately, a select few (4 out of our 150+ investors) have stooped to a heartless level, ensuring that we are unable to utilize the funds raised to pay your hard-earned salaries. At their behest, the amount raised through the rights issue is currently locked in a separate account," said Raveendran, in a letter to Byju's employees.
Moneycontrol has seen a copy of the letter. Raveendran added that the company will now making efforts to ensure that employee salaries are paid by the 10th of March.
"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," he added.
This comes as the National Company Law Tribunal (NCLT) in its order passed on February 27 directed the edtech company to keep funds received from the rights issue in an escrow account till the disposal of the oppression and mismanagement plea filed by four of the company's investors.
The plea was filed by Byju’s investors, including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, who opposed the company's decision to raise $200 million at a post-money valuation of $225 million, which is 99 percent lower than the company's last funding round which happened at a valuation of $22 billion.
This came an evening before, on February 23, Byju's shareholders, including prominent investors, had voted unanimously for removing founder-CEO Raveendran and his family from the board over alleged "mismanagement and failures."
In the letter sent to employees today, Raveendran also said that he "fought fearlessly and tirelessly, leaving no stone unturned," to find a way to honour the company's commitment to employees.
"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," he added.
Byju’s mountain of troubles
The company has laid off thousands of employees in the last 12 months as it battled a double blow of drying venture capital funding and slowing demand for online learning services. Since then, its investor board members have left too, citing differences with Raveendran.
The company has tried to fix some of the problems since then. Its early investor Ranjan Pai ploughed in the capital, it set up an advisory council with veterans such as Mohandas Pai and Rajnish Kumar and elevated Arjun Mohan as CEO. It is also in talks to divest assets such as Great Learning and Epic.
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