Byju's extends olive branch to dissenting investors, gives 72 hours to participate in rights issue

Byju Raveendran

In a bid to extend an olive branch to shareholders like Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus who tried to block the company's rights issue and oust founder Byju Raveendran, the embattled edtech firm Byju's has told its investors who didn't participate in the funding round that they are welcome to join in the next 72 hours, according to sources.

Moneycontrol has seen a letter that Byju Raveendran wrote to investors in this regard.

"As you are aware, we closed the rights issue last month, which was a crucial step towards ensuring the sustainability and growth of our company in these challenging economic conditions. I am happy to inform you that, in response to the postal ballot which was announced on 7 March, we already got more than 50% votes to the increase in authorised share capital," he wrote.

"From the very inception of this company, my vision has been to take everyone along, from one milestone to another. And it has always been my conviction that we will overcome our challenges together," he added.

"With this in mind, I am aware that some of our valued existing shareholders were unable to participate earlier in the rights issue. In good faith the board is show good faith towards all our shareholders and would like all of you to be part of our turnaround story. While we have received significant interest from third parties, our priority remains with our existing shareholders and hence we are looking at how we can extend this opportunity to all of you," he further said.

Meanwhile, the National Company Law Tribunal (NCLT) on March 28 refused to defer an extraordinary general meeting called by the board of directors of embattled edtech company Byju’s to raise the authorised capital to give effect to the rights issue.

The tribunal has now listed the case for hearing on April 4 in where other issues will be addressed too.

On February 27, the NCLT had directed Byju's to keep funds received from the rights issue in an escrow account till the disposal of the oppression and mismanagement plea filed by the four investors.

The tribunal had further directed Byju's to "consider the extension of the closure date of the right issue so that the rights of the petitioners about the making of applications for shares under their rights entitlement does not get prejudiced".

Byju's floated a rights issue in January to raise $200 million at an enterprise valuation in the range of $220-250 million which is a 99 percent reduction in its peak valuation of $22 billion.

The issue has been fully subscribed, founder Raveendran had said in a shareholder letter in February. Sources said that the company's founder is set to put $45-$46 million in rights issue to preserve his shareholding in the company.

The edtech is dealing with the twin crises of a cash crunch and some of its investors seeking to oust the leadership to reconstitute the board.