BYJU'S invites dissenting shareholders to participate in rights issue
What's the story
BYJU'S, the edtech company currently facing challenges, has extended an invitation to its dissenting shareholders to participate in a rights issue within the next 72 hours.
The firm initiated a rights issue in January, with the aim of raising $200 million at an enterprise valuation of $220-250 million.
This valuation represents a significant 99% decrease from its peak valuation of $22 billion.
Appeal
Raveendran appeals to shareholders for company's survival
In a letter, BYJU'S founder, Byju Raveendran, communicated to investors that the rights issue was crucial for the company's survival and growth amid challenging economic conditions.
He revealed that more than half of the votes needed for an increase in authorized share capital, were already secured following a postal ballot announced on March 7.
Raveendran emphasized his vision of collective progress and overcoming obstacles together.
Priority
Prioritizing existing shareholders in turnaround story
Raveendran acknowledged that some shareholders were unable to participate in the previous rights issue.
He stated, "The board is showing good faith towards all our shareholders and would like all of you to be part of our turnaround story."
Despite significant interest from third parties, Raveendran emphasized that their priority remains with existing shareholders.
Tribunal decision
NCLT declines to postpone BYJU'S general meeting
On March 28, the National Company Law Tribunal (NCLT) declined to postpone an extraordinary general meeting called by BYJU'S board of directors to raise the authorized capital for the rights issue.
The tribunal has scheduled the case for hearing on April 4 where other issues will also be discussed.
Previously, on February 27, NCLT had directed BYJU'S to hold funds received from the rights issue in an escrow account until resolution of a plea filed by four investors.
Investment plan
Raveendran to invest in rights issue
According to a shareholder letter by Raveendran in February, the rights issue has been fully subscribed.
Sources revealed that Raveendran is set to invest $45-$46 million in the rights issue to maintain his shareholding in the company.
This comes as BYJU'S is currently grappling with a cash crunch and some investors seeking to remove the leadership and restructure the board.
Share offering
BYJU'S considers offering renounced shares
In his email to shareholders, Raveendran stated that BYJU'S board is considering offering renounced shares to prevent dilution of their holdings.
This consideration comes despite legal actions pursued by some investors who didn't participate in BYJU'S recent $200 million rights issue, and sought to remove Raveendran and his family from the start-up and invalidate the rights issue.
Raveendran expressed hope that investors will continue with BYJU'S in the same spirit with which they first joined their journey.