On Friday, Byju’s, the struggling edtech firm, informed its shareholders that the board intends to offer shares to dissenting shareholders who abstained from participating in its rights issue. This move aims to prevent additional dilution to their shareholding.
The Financial Express has reviewed a copy of the letter that Ravendran Byju has written to investors.
This development comes as the company has successfully garnered more than 50% of the required votes to expand the authorised share capital, clearing the path for its $200 million rights issue.
“Despite the animosity shown by some of the investors in pursuing uncalled for legal actions, we continue to show good faith towards all our shareholders and would like all of you to be part of our turnaround story,”Byju Raveendran, founder and CEO, Byju’s, said in a letter to investors.
Now the company is able to issue fresh shares to new investors after securing a majority vote for its proposal to increase authorised share capital, it expects to allow the company in raising the $200 million through a rights issue at a 99% reduction from its highest valuation of $22 billion achieved in 2022, as per media reports.
In the letter, Raveendran said that there is significant interest from third parties but will continue to prioritise the existing shareholders by extending this offer. “I hope you will see the value in continuing with Byju’s in the same spirit with which you first joined our journey. I look forward to your response and to our continued partnership to transform the global educational landscape,” he underlined.
Current investors of Think & Learn, the parent company of Byju’s, spearheaded by Prosus, took action in the National Company Law Tribunal (NCLT) Bengaluru to halt a planned extraordinary general meeting (EGM) and prevent the rights issue, fearing significant losses to their investments last month. Prosus, along with other stakeholders such as General Atlantic and Peak XV, voted to oust Byju Raveendran and his family from Byju’s board during the EGM. This decision was part of a strategic move to address governance, financial mismanagement, compliance issues, and leadership changes within the company.
Nevertheless, the debt-ridden edtech startup made progress in resolving its liquidity concerns as the NCLT declined to halt the EGM aimed at increasing the authorized share capital, thereby enabling the $200 million rights issue to proceed. The NCLT has scheduled a hearing for April 4th.
Investors argued that they were denied access to essential documents necessary to make informed voting decisions at the EGM and alleged that not all shareholders received proper notice as mandated by law. However, Byju’s countered these claims by asserting that investors were indeed given an opportunity for document inspection, and the EGM notice was duly distributed to all shareholders, as per media reports.