The clarification is in relation to a lawsuit that Byju’s Alpha faces in a Delaware court, in relation to the recovery of a $1.2 billion loan taken by the edtech major in 2021. Lenders who filed the suit have claimed that because of the default earlier this year, they have the right to put their representative, Timothy R. Pohl, in charge, news agency Bloomberg first reported on May 18.
The lawsuit was filed by Glas Trust Company and investor Pohl against Byju’s Alpha, its director, Riju Ravindran, and Tangible Play Inc.
Riju Ravindran is the younger brother of Byju’s founder Byju Raveendran.
Earlier this year, a top manager at Byju’s Alpha “admitted to transferring half a billion dollars ($500 million) out of the company,” a lawyer representing Pohl said during the ongoing hearing, according to the Bloomberg report.
In a statement categorically denying these allegations, Byju’s said, “This is an interim order of a Delaware Court to maintain status quo in relation to Byju’s Alpha, a non-operative US entity set up to receive the Term Loan B, with no employees. The litigants have made bewildering claims that Byju’s “moved” $500 million from Byju’s Alpha, insinuating that these acts were somehow wrongful. This is entirely incorrect.”
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The edtech firm, whose premises were also searched by the Enforcement Directorate last month, has said that “the funds were transferred to other operative entities for growth and expansion in its global operations.” “In fact, even lenders have not alleged that the transfer was not permitted under parties’ existing contractual arrangement… Byju’s entered into the Term Loan B agreement with the clear intention of utilizing the raised funds to drive growth and expansion in its global operations and is free to transfer and use the funds as necessary,” the company said in a media statement on Friday.
While the lenders suing Byju’s US subsidiary have claimed defaults, the edtech company denied these claims, stating that it has “fulfilled all its contractual payment obligations as agreed upon in the Term Loan B signed in 2021 and has not missed a single payment thereunder.”
“There have been no monetary defaults under the loan … The lenders’ allegations (which also we dispute) concern merely insignificant technical and non-monetary defaults,” it said.
The recently concluded ED raids at Byju’s were a part of a probe into alleged violation of foreign exchange rules over the investments received and transfer of funds abroad by the edtech startup.
ET reported last month that the probe into Byju’s accounts had been ongoing for the past two years. Byju Raveendran, who is also the company’s chief executive, has been summoned 4-5 times.
Earlier, this month, Byju’s closed a Rs 2,000-crore (or roughly $250 million) round from Davidson Kempner Capital in a structured credit transaction against the cash flows of its test prep subsidiary Aakash Educational Services, ET reported, citing sources.
The round consisted of a three-year loan facility with an equity upside linked to Aakash’s planned public listing in the near future. The transaction was raised via a combination of non-convertible debentures (NCDs) and a smaller portion of compulsorily convertible debentures (CCDs).
The company confirmed the development in its statement on Friday and said, “The successful completion of a recent funding round of $250 million further reinforces our financial stability and serves as a testament to the unwavering confidence that investors have in our business. We will continue to assertively negotiate with our lenders to secure a resolution.”