BYJU’S Says It Is Beneficiary Owner Of $533 Mn US Fund

Hours after BYJU’S claimed it had no money to pay salaries to staff following the freshly raised funds via rights issue, the edtech major said ahead of a US court hearing that it has $553 Mn parked in an American investment firm.

On Sunday (March 3), BYJU’S, ahead of a hearing on the whereabouts of its $553 Mn funds, said that its subsidiary in the US is the beneficial owner of the fund, PTI reported.

“Camshaft, in its latest submission, has disclosed to the Delaware Court that the $533 Mn was transferred from BYJU’S Alpha to another 100% Think & Learn owned subsidiary, Inspilearn LLC (a Delaware firm). As BYJU’S has indicated previously – the funds continue to remain in a Think and Learn subsidiary, contrary to the false allegation made by a select list of investors before the NCLT in India,” BYJU’S said in a statement.

The Florida hedge fund was asked to reveal where the money is located or face possible sanctions from a federal judge. “Camshaft, in its latest submission, stated it had transferred the money to a non-US Fund in the name of a 100% subsidiary of Think & Learn, Inspilearn LLC. It also clarified that no limited partners in the Camshaft Capital Fund are related or are any subsidiary of Think & Learn,” the statement added.

Camshaft is a wealth manager that managed the funds, according to the BYJU’S statement. The manager transferred the money to a 100% subsidiary of BYJU’S, the company said. 

BYJU’S said that this is consistent with its position that the group entities remained the beneficiary holders of the money, which the lenders have sought to gain information of, citing technical defaults.

The edtech major further said that the latest disclosures dispel fake narratives that the $553 Mn have been siphoned off. It said that the credit agreement with the lenders does not prohibit or restrict the “usage, movement or investment of funds disbursed”. 

“Some predatory bond traders procured the filing of proceedings before the US Bankruptcy Court as part of their campaign to unlawfully accelerate the Credit Agreement. Additionally, unfounded allegations were made by four Think and Learn shareholders before the NCLT last week as they pursued their misguided attempt to unilaterally replace the current board and the CEO, Mr Byju Raveendran,” the BYJU’S statement added.

Last week BYJU’S said it has successfully closed its $200 Mn rights issue, at a valuation cut of 99%. However, the startup has yet again delayed salary payments to the employees.

In an email sent to employees, BYJU’S founder and CEO Byju Raveendran said that despite having the funds to pay the salaries for the month of February the startup is not able to credit them because of the actions of some of the investors.

Inc42 has accessed the email sent by the CEO to employees.

“Unfortunately, a select few (4 out of our 150+ investors) have stooped to a heartless level, ensuring that we are unable to utilise 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,” Raveendran said.

The latest development comes at a time when BYJU’S and its promoters are at war with investors, which has resulted in both sides moving to different courts. Some of BYJU’S investors held an extraordinary general meeting (EGM) last week and passed seven resolutions, including those calling for reconstitution of the board and the ouster of Raveendran and his family members – wife Divya Gokulnath and brother Riju Raveendran – from their management roles at the startup.

However, Byju Raveendran got a temporary relief from the Bengaluru High Court a day before the EGM. The HC, in an interim order, said that any decisions taken by shareholders at the EGM will not come into effect till the next hearing in the case on March 13.