Byju's clarifies on $533 million loan, says funds not misappropriated
Byju's, the edtech startup, faces scrutiny over the placement of a $533 million loan, with allegations of misappropriation leading to legal battles and financial disputes. The company clarifies that the funds are held by a non-US subsidiary, dismissing claims of wrongdoing
FollowByju's, the embattled ed-tech startup, issued a statement on Tuesday asserting that the $533 million received from foreign lenders as part of a $1.2-billion term loan B has been appropriately placed with a non-US subsidiary of the company, dispelling allegations of misappropriation. Recent court proceedings revealed that four investors in Byju's had accused the company of diverting $533 million, prompting them to seek a stay on the firm's rights issue.Â
Although the court permitted the rights issue to proceed, it prohibited Byju's from utilizing the funds raised through this avenue. Consequently, the company faced challenges in disbursing employee salaries, citing financial constraints. Disputes over the allocation of the $533 million have also arisen between Byju's and its lenders. The startup clarified that hedge fund Camshaft Capital no longer manages these funds, following accusations against its founder of aiding Byju's in concealing the money.
Clarification Amid Allegations
In response to reports by Bloomberg implicating Camshaft Capital, Byju's emphasized that the loan proceeds were transferred to a wholly-owned subsidiary of the company, consistent with its stance that group entities retained ownership of the funds. The startup established a US-based entity, Byju's Alpha, to receive the loan, initially entrusting Camshaft with fund management responsibilities.
Byju's defended its actions, stating that there was no impropriety in the arrangement and refuting claims of fund diversion.
Mounting Losses
Meanwhile, Byju's disclosed staggering losses in its latest financial report, revealing a net loss of Rs 8,553 crore for the fiscal year ending March 2023, surpassing the previous year's loss of Rs 8,240 crore. Despite an increase in revenue to Rs 6,245 crore from Rs 5,015 crore in the previous year, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) remained negative at Rs 6,254 crore.
The delayed financial disclosure compounds the challenges faced by the ed-tech startup, including multiple insolvency petitions filed against it in the National Company Law Tribunal and uncertainties surrounding a $200 million rights issue.
