The senior management of cash-strapped edtech firm Byju’s told employees that the company has secured commitments to subscribe to more than 100% of its proposed $200 million rights issue of shares.
In an email note to employees Friday, the management blamed an “artificially induced crisis” by a select group of investors for a delay in paying the January salary. The salary will be paid in a phased manner starting Friday and will be completed by Monday, it said.
The note to employees comes a day after a group of investors issued a notice seeking an extraordinary general meeting of the shareholders of Think & Learn Pvt Ltd, the parent of Byju’s. These investors are demanding a change of management and board at Byju’s, citing “persisting issues”. With the management blaming some of its investors for the current crisis, the fight between the shareholders and the company has now emerged out into the open.
“The success of the rights issue will ensure that we have sufficient operational capital to fund our short-term needs from March onwards,” said the email that ET has seen.
“This (rights issue) process will take 25 more days to complete. It will ensure we have enough growth capital, and also to meet all operational liabilities. This will mark the beginning of the final phase of our recovery,” said the email, collectively signed by the management.
The management, the email said, was “pained to see” investors demanding founder and chief executive Byju Raveendran to step down.
“Certain investors, seeing the crisis we faced, saw it as an opportunity to conspire and demand the stepping down of our founder as the group CEO of Byju’s. We are pained to see this action from a few of the investors who should have supported us in our fight at these challenging times, instead of directly speaking to media,” the note said.
It said the “founders are the largest investors and the greatest fighters” for the company.
“Over the past months, we have together weathered storms that few companies have ever faced. When investors hesitated to step up during harsh macroeconomic conditions, the founders personally invested over 1 billion dollars in capital to keep our dream alive,” it said.
On Thursday, the investor group, including Peak XV Partners and Prosus, said they sent the notice seeking the EGM after earlier requests to the Think & Learn board in July and December last year were disregarded.
“The resolutions being put forward for the EGM to consider include a request for the resolution of governance, financial mismanagement and compliance issues; the reconstitution of the board of directors, so that it is no longer controlled by the founders of Think & Learn; and a change in leadership of the company,” the investor group said in a statement.
General Atlantic, Sofina, the Chan Zuckerberg Initiative, Owl Ventures and Sand Capital are among the signatories from the investor group.
“We are deeply concerned about the future stability of the company under its current leadership and with the constitution of the board,” the investors said on Thursday.
The board members of Think & Learn include Raveendran, his wife and Byju’s cofounder Divya Gokulnath and brother Riju Ravindran. Former State Bank India chairman Rajnish Kumar and ex-Infosys finance chief Mohandas Pai are part of Byju’s advisory council, which was formed in July after the resignation of Prosus, Peak XV and Chan Zuckerberg Initiative representatives from the board.
