Lenders were within their contractual rights to replace a relative of company founder Byju Raveendran on the board of Byju’s Alpha with their nominee, according to a judge
Even as lenders have been pushing hard to recover a $1.2 billion loan from Byju’s, lenders have now taken over the control of a unit of the edtech giant, Byju’s Alpha, according to a Bloomberg report citing a Delaware judge.
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According to the report citing Delaware Chancery Court Judge Morgan Zurn, the lenders — which include Redwood Investments LLC and Silver Point Capital LP — were within their contractual rights to replace a relative of company founder Byju Raveendran on the board of Byju’s Alpha, a special-purpose company formed for financing purposes, with their nominee.
The court rejected a complaint by Byju’s that Timothy Pohl was improperly authorised to take the charge. Pohl has been roped in by the lenders to oversee the special purpose entity.
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The judge in a 41-page ruling said Pohl was “effectively seated” as the sole director of Byju’s Alpha because of the defaults, according to the Bloomberg report.
Recently, Byju’s also faced another woes — the pressure to sell its US-based digital reading platform Epic! Creations. According to a Bloomberg report citing people familiar with the matter, Byju’s was also in talks to sell Epic! Creations for about $400 million to private equity fund Joffre Capital due to financial pressure.
Byju’s has been looking to raise up to $1 billion by selling two companies – Great Learning and Epic – in a bid to streamline its business and repay lenders.
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The potential sale of Epic would help Byju’s fund its disputed $1.2 billion term loan.
Byju’s, backed by investors such as General Atlantic, Prosus and Silver Lake, was valued at $22 billion last year. It has face multiple challenges recently, including its auditor and board members quitting. It has also been negotiating the repayment of a $1.2 billion loan in the last few months.
