The lenders for Byju, who held a $1.2 billion term loan, attempted to prevent Pai from converting a $250–$300 million loan into equity at the Aakash Institute.According to The Economic Times, Byju’s won a lawsuit on Monday when a Bengaluru civil court denied a motion from its lenders to contest Manipal Group Chairman Ranjan Pai’s purchase of a 40% share in Aakash Institute.
In order to prevent the deal from going through, the lenders of Byju’s $1.2 billion term loan filed a petition, enabling Pai to convert a loan of between $250 and $300 million into equity in Aakash Institute.According to people familiar with the situation, Byju’s and Pai were taken aback by the lenders’ action, the report stated.The edtech startup has been dealing with a number of setbacks and financial issues. These problems might lead them to postpone signing Messi’s three-year contract.
Prior to now, Byju’s principal backers declared their plan to ask for a board reorganisation of the floundering Indian educational technology startup, hoping for a leadership transition at an impending extraordinary general meeting.The lenders contended that Think & Learn, Byju’s parent company, would suffer as a result of Pai’s conversion of debt into equity at a lower valuation of $600 million as opposed to the previous valuation of $950 million for Aakash Institute.
Eighty percent of the term loan that Byju’s raised in November 2021 is owned by the lender group.In addition to commenting on the jurisdictional issue, the court on Monday rejected the lenders’ request for an injunction to halt the deal.Over the weekend, Byju’s presented its case in the city civil court. In the report, a representative for Byju’s confirmed the court proceedings but did not offer any additional information.
Byju’s added, “A Bengaluru court has dismissed a suit filed by the TLB lenders against Byju’s in an order issued today. Thus, the misguided attempt by the lenders to bar Byju’s from selling its shares in Aakash Educational Services Ltd. has been turned down.
Aakash Institute is a well-known offline coaching company and a vital asset for Byju’s. Pai is the largest investor in the company and has requested approval from the Competition Commission of India (CCI) for the deal. Prior to the start of the student enrollment season, Pai plans to provide Aakash with fresh funding to support its operations.
Whether the lenders will appeal the civil court’s ruling to higher courts is still up in the air. This legal battle is the first of its kind to be heard in an Indian court regarding the difficulties Byju’s is facing as a result of its debts.Byju’s is dealing with additional difficulties in addition to this legal battle; lenders have started insolvency proceedings against the company, and its US subsidiary has filed for bankruptcy.Regarding his conversion of stake in the business, Prosus, another investor in Byju’s, has also served Pai with a formal notice.
Byju’s, meanwhile, has retaliated against calls from certain investors for changes to the board and management, claiming that they don’t have the power to change the company’s leadership. Byju’s reported that it has raised more than 100% of the $200 million it planned to issue in rights, demonstrating continuous fundraising efforts.A group of investors, which included Prosus and Peak XV Partners, announced last Thursday that they were calling for an extraordinary general meeting (EGM) in response to the Think & Learn board’s rejection of their prior requests.
