Athira Sethu
Kochi, 10 October 2024
Byju Raveendran, the founder of Byju’s, has provided details relating to the $1.2 billion term loan the US lenders have provided, stating that the sum was taken by it for ‘legitimate business purposes’.
According to Byju Raveendran, in his recent filing with the US Bankruptcy Court, the term loan was primarily for large, significant worldwide expansion efforts, organic as well as acquisitions.
As part of this targeted strategy, Byju’s spent over $200 million in marketing and branding to fortify its foothold around the world. It also made some small acquisitions and opened offices in seven new countries to expand its international footprint.
Byju Raveendran revealed that nearly $300 million of the loan was to account for the losses from one of the subsidiaries, Tangible Play, specifically catering to North America. Byju’s had hoped to raise between $500 million and $750 million; however, the loan amount reached $1.2 billion due to high demand from investors, as stated by him. He further clarified that all the major decisions regarding the loan were taken with the consent of existing investors.
However, Byju’s hasn’t been able to pay back the loan. The US lenders have said that the company hasn’t paid its obligatory installments over the past 17 months. Byju Raveendran claims that the liquidity crunch came just as they were expecting returns on their investments. He said the financial situation had changed as it was partly created by the plans of the US Federal Reserve to hike interest rates.
Apart from this, an equity investment of $700 million promised had not arrived since the investors did not comply with their agreements after signing.
The lenders have acted against Byju’s latest settlement with BCCI. Funds related to the settlement were siphoned off, said lenders representing Glas Trust Co LLC. Raveendran Byju, however, rebutted saying these allegations are disturbing and false.
The Supreme Court of India suspended all the meetings on the insolvency proceedings related to Byju’s on September 26 after Glas Trust challenged its removal from the creditor committee of the company. Pankaj Srivastava, the interim resolution professional of Byju’s, had removed Glas Trust stating that it did not represent the required majority of lenders.
The legal battles do not seem to end. The NCLAT had rescheduled its hearing with Byju’s and its US-based lenders to November 6th. Another case against Byju’s parent company, Think & Learn Pvt Ltd, filed by a set of investors in the NCLT is also now to be heard on November 18th after the case went to Supreme Court review.
In the process, statements by Byju Raveendran may be an attempt to clarify the company’s actions and efforts being made to placate the concerns that several lenders and stakeholders have been making.
