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The National Company Law Tribunal (NCLT), in an order dated June 12, has directed edtech major Byju’s to maintain status quo in its shareholding, effectively pausing its controversial rights issue.
Byju’s $200-million rights issue is being conducted at a 99% discount to its last peak valuation of $22 billion – triggering protests from a group of investors including Peak XV Partners and Prosus.
NCLT has asked Byju’s to pause its ‘second rights issue’ and keep all cash from the first rights issue in an escrow account, dealing a fresh blow to the embattled edtech. It also sought details from the Byju Raveendran-led firm as to who these shares were issued to through the ‘first rights issue.’ ET has seen a copy of the order.
The two rights issues –against which investors filed a petition in the NCLT–essentially mean Byju’s wasn’t able to raise $200 million in full from the planned rights issue and was conducting it in two tranches. The NCLT has asked Byju’s to not use any cash that has been raised so far through the ‘second rights issue’.
This is contrary to company founder Raveendran’s email to staff where he had said the rights issue was fully subscribed.
“This Tribunal hereby restrains the Respondents (Byju’s) from going ahead with the present rights issue which is in progress, till the disposal of the main plea. The Respondents are further directed to keep the amounts collected so far since opening of the second rights issue…in a separate account which should not be utilised till the disposal of the main petition,” the order said.
The matter will be heard next on July 4.
The tribunal also sought details of allotment of shares on March 2 and the details of the Escrow banks accounts from the edtech firm through a compliance affidavit with a memo within a period of 10 days.
Earlier this month, a section of lenders in a consortium that lent $1.2 billion to Byju’s said they had petitioned a US court to initiate bankruptcy proceedings against the company’s subsidiaries — Epic, Tynker and Osmo.
The lenders had been in negotiations with the company over prepayment of the term loan taken by the edtech firm through another subsidiary, Byju’s Alpha. While this group of lenders has sought to initiate court-monitored restructuring of the three subsidiaries under Chapter 11 of the US Bankruptcy Code, the two sides also continue to fight another legal battle in American courts over the loan.
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