Once again, BYJU’S Postpones Paying its Employees as it Grapples with Investors

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Three points you will get to know in this article:

  • BYJU’S CEO says March salaries delayed to April 8, blames investors.
  • Byju Raveendran is pursuing a line of credit for employee salaries by April 8.
  • NCLT told edtech giant to keep rights issue proceeds in separate escrow account.

Salary Payment Delays

The troubled education technology company BYJU’S has once again postponed the payment of salaries to its employees, marking the second consecutive month of delays. In an email to staff, BYJU’S founder and CEO Byju Raveendran announced that March salaries will now be distributed on April 8, attributing the delay to ongoing issues with investors.

Effect of Investor Constraints

In a recent development, certain foreign investors in BYJU’S have secured a temporary order towards the end of February, restricting the utilization of funds acquired from the successful rights issue. This unexpected move by these four investors has unfortunately resulted in the temporary suspension of salary disbursements until the constraint is lifted,” shared the founder in an email.

National Company Law Tribunal Intervention

It’s worth mentioning that BYJU’S faced a delay in distributing employee salaries for February, attributing it to the inability to utilize the funds from the $200 million rights issue. However, it managed to clear the salaries for some employees in full and for others partially by March 8.

Earlier, a group of investors in BYJU’S, including Prosus, General Atlantic Singapore, Peak XV Partners, and Sofina, took their concerns to the National Company Law Tribunal (NCLT). They expressed reservations about the company’s decision to seek $200 million in funding, which would lead to a significant 99% reduction in valuation.

Responding to this, the NCLT instructed the edtech giant to securely hold the proceeds from the rights issue in a dedicated escrow account.

Efforts to Secure Line of Credit

In correspondence, Raveendran assured employees that the company is actively exploring avenues to secure a line of credit. This measure aims to ensure that everyone’s salaries are processed and received by April 8th.

“In brighter news, we’ve got the green light to boost our authorized capital for the rights issue, which is a great step forward,” expressed the CEO optimistically. “This means that once the restrictions on utilizing the funds we’ve raised are lifted, we’ll be able to promptly fulfill all our salary commitments,” the CEO added.

Extraordinary General Meeting and Investor Participation

Following the closure of the $200 million rights issue, BYJU’S promptly notified its shareholders about an upcoming extraordinary general meeting (EGM) scheduled for March 29. The purpose? To seek approval for an increase in its authorized share capital.

Some of the dissatisfied investors filed a petition with the National Company Law Tribunal (NCLT) requesting a halt to the Extraordinary General Meeting (EGM). However, the Tribunal declined to stop the meeting.

Last week, Raveendran informed the shareholders of the company that the board of BYJU’S was contemplating an opportunity for the disgruntled investors to partake in its rights issue.

BYJU’S, the troubled edtech company, faces ongoing challenges with delayed salary payments due to investor issues. Foreign investors’ restrictions from a rights issue lead to financial strains and suspension of salary disbursements. Involvement of investors like Prosus and General Atlantic in legal proceedings exacerbates BYJU’S financial woes. Founder Byju Raveendran assures efforts to

Manvendra Hada

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