Byju’s Transfer of $500 Million: Delaware Court Denies Lenders’ Request for an Investigation; Prosus Reduces Startup’s Valuation
According to a PTI report citing information from sources, a Delaware court has denied a plea by edtech giant Byju’s Term Loan B lenders to look into a $500 million transfer from its US-based company BYJU’S Alpha to other firms. Byju’s had refuted the claims made by the lenders of its $1.2 billion Term Loan B, asserting that company had never missed a payment.
The struggling Indian edtech firm Byju’s value has been reduced by Dutch-listed technology investor Prosus NV to $5.1 billion, according to its annual report, down more than 75% from the business’s $22 billion estimate last year.
Days after it and other investors left Byju’s board, Prosus decreased the value of its 9.6% interest in the company to around $493 million in the fiscal year that ended on March 31. Prosus is the largest stakeholder in the business.
The Vice Chancellor concluded that lenders had “no basis to further investigate the transfer” after rejecting their request for details about the $500 million (a portion of the monies received by Byju’s Alpha). By doing this, the Vice Chancellor has ended the lenders’ pointless search for information and prevented them from attempting to inject a non-issue into the proceedings, which are only concerned with ascertaining who controls Byju’s Alpha, a source told PTI.
Through their agent, GLAS Trust Company, the TLB Lenders have filed a lawsuit against BYJU’s US-based subsidiary over the removal of USD 500 million from BYJU’s Alpha as well as other TLB-related concerns. TLB is an institutional investor-issued loan.
In addition, the report cited a copy of the judge’s order that a source had access to, which stated: “Plaintiff may rely on Ravindran’s reaction as evidence that he perceived an Event of Default has occurred, and for other admissible purposes, but Plaintiff has no basis to further investigate the transfer itself in this action.” BYJU’S, which has been attempting to reassure investors on concerns regarding its financial performance, may now breathe a sigh of relief after the rejection of the lenders’ request.
In order to oppose the acceleration of the USD 1.2 billion Term Loan B and to disqualify lender Redwood, BYJU’S filed a lawsuit in the New York Supreme Court. Redwood then ceased paying the loan payments that were due. BYJU’S claimed in a statement in the first week of June that Redwood continuously grew its exposure by acquiring a sizeable position in the TLB with the intention of making windfall profits.
According to BYJU’S, the TLB lenders tried unsuccessfully in the Delaware proceedings to deny BYJU’S its legal authority to exclude lenders that engage largely in opportunistic trading. The Delaware court rejected this effort, saying that the TLB lenders “have not demonstrated either irreparable harm or the balance of the harms as required to support a provision restraining” this contractual right of BYJU’S, the business stated.
As required by the TLB, BYJU’S claimed that the TLB lenders’ representative even refused to provide it the names of the TLB lenders, and that the lenders had repeatedly acted to damage BYJU’S image. The edtech giant said that it had no choice but to start legal procedures in New York, the contractually specified venue, to contest the acceleration. The Redwood entities have also received a warning from BYJU’S disqualifying them in addition to this.
Redwood would be prohibited from using key TLB privileges if such disqualification became effective, the business claims. BYJU’S and GLAS Trust did not respond to emails made to them.
Byju’s, with a $22 billion market cap, has been having issues as a result of missing deadlines to submit audited financial records.
The edtech behemoth Byju’s also began laying off staff across divisions this week in an effort to reduce expenses amid rising hostility with lenders. According to sources, there will likely be more than 1,000 layoffs, largely of senior workers who have worked for more than two years.
