Edtech company Byju’s CEO Byju Raveendran, amid the ongoing financial crisis, said the firm will not be able to pay the salaries of the employees, lambasting the investors for moving a resolution to lock the funds of the company in a separate account.
Raveendran, in a letter addressed to the staff, said the rights issue launched by the company has been successfully closed, but the funds raised through the round have been locked away in an inaccessible account due to a legal dispute with investors.
“This was supposed to be a happy correspondence. After all, we now have funds to meet our short-term needs and clear our liabilities. However, I regret to inform you that we will still be unable to process your salaries,” he said.
While the company is struggling to access funds, the board is still striving to ensure that the salaries of the staff members are paid by March 19, Raveendran said in the letter.
The Byju’s founder said that the company will be paying the salaries of the employees as soon as they are legally allowed to access the funds. He wrote in the letter that last month, the company faced challenges due to lack of capital, and they are experiencing a delay in salary payments despite having the funds.
“Unfortunately, a select few (4 out of our 150 plus investors) have stooped to a heartless level, ensuring that we are unable to utilise the funds raised to pay your hard-earned salaries,” Raveendran said. “At their behest, the amount raised through the rights issue is currently locked in a separate account,” he added.
Slamming the investors, Raveendran wrote, “It is an agonising reality that some of these investors have already reaped substantial profits – in fact, one of them has made a staggering eight times their initial investment in BYJU’S. And yet, their actions convey a callous disregard for our lives and livelihood.”
Byju’s rights issue controversy
Last month, Byju’s launched a rights issue to raise an emergency round of funding for immediate capital of $200 million, at the valuation of $225 million. This round of funding effectively cut the valuation of Byju’s by over 90 percent.
Earlier this week, a company law court had asked the embattled edtech firm to consider extending the closing date of the USD 200 million rights issue, a request that the management had hinted it would not accept even as estranged investors flagged technicalities that prevented the closure of the issue on Wednesday.
In an interim order dated February 27, the National Company Law Tribunal (NCLT), Bengaluru Bench said the funds received by the company in respect to the rights issue should be kept in a separate escrow account, and it should not be withdrawn till the disposal of the matter.
(With inputs from PTI)
