Byju secured favorable outcomes in two court hearings on Thursday, paving the way for the beleaguered edtech startup to move forward with an extraordinary general meeting scheduled for Friday.
The National Company Law Tribunal on Thursday refused to postpone Byju's planned EGM, where the Indian startup seeks to increase its authorized share capital to enable a $200 million share subscription issue. The Companies Court said the matter would be heard again on April 4. A lawyer representing the four estranged investors in Byju's pointed out that once the authorized share capital has been increased, it cannot be reinstated.
Byju's investor group, including Prosus, Peak I'm trying to get him removed from the company.
The Karnataka High Court separately announced on Thursday that it would only hear the case brought by a group of investors seeking Raveendran's removal after two months.
The rights issue is crucial for Byju's, once India's most valuable startup, as it seeks to leverage the $200 million it has already received from a series of investors, including Mr. Raveendran. In an interim order last month, the court directed Byju's to move the funds into an escrow account and not use the account until the matter is resolved.
Those close to Byju claim that the estranged investors are trying to delay the rights issue and completely starve the edtech group. The investor group did not comment.
Byju and some of its investors have been in a battle for nearly a year over what shareholders say are operational and governance challenges at the Indian company. The company was in the final stages of raising about $1 billion last year, but negotiations with auditor Deloitte came after three key board members (representatives from Prosus, Peak XV and the Chan Zuckerberg Initiative) suddenly left the startup. failed. Instead, Byju's will raise his less than $150 million in debt from Davidson Kempner, and another after he committed a technical default on his $1.2 billion Term Loan B. I had to repay the entire amount promised to the house.
When the funds dried up, Byju's suddenly launched a rights issue that reduced its valuation by 99%. Prosus, Peak XV, the Chan Zuckerberg Initiative, Sofina and some other investors declined to participate in the rights issue. Instead, they voted last month to exclude Raveendran and his family from the startup. Mr. Raveendran later told employees that he was still chief executive and that rumors of his firing were “highly exaggerated.”
In his letter, Mr. Raveendran claimed that the EGM did not have the minimum quorum and could not obtain majority support for the proposed resolution. The meeting also violated several other “significant” local regulations, he claimed.