Byju's: Raveendran offers to appoint 2 directors
CHENNAI: Amid efforts to replace Bjyu’s, chief executive Byju Raveendran has offered to appoint two independent directors to the company’s Board and third-party monitoring to improve transparency.
In a letter to the shareholders, he said the company’s $200 million rights issue has been fully subscribed and will help the company take care of liabilities and provide growth capital.
This comes at the time when a group of investors at Think and Learn Pvt Ltd, the parent entity of Byju’s, have called for an extraordinary general meeting (EGM) on Friday to replace Raveendran as CEO and his family members from the board over financial mismanagement, compliance issues and other serious allegations as per news reports.
Investors’ alleged erosion of value due to management’s failure to enforce the company’s legal rights as the reason in the troubled ed-tech firm. “I understand participating in this rights issue may seem like a Hobson’s choice. However, this is the only viable option in front of us today to prevent permanent value erosion,” he said in his letter.
“The board decided on a price that would be attractive to all shareholders without straining them. We chose a rights issue as the most equitable way of raising capital without needing to ascribe a valuation. The ownership of the company does not change pre and post a rights issue, so the question of valuation itself is irrelevant as value preservation is maintained,” he said. The company was valued at $22 billion last year and witnessed several mark down since then, reducing almost 99% of its valuation.
Raveendran argued that higher price would have benefited him as the largest shareholder but chose the company’s interest and claimed he personally put in $1.1 billion in the company in the last two years to maintain operations.
He also committed to restructuring the board and appointing two non-executive directors after completion of 2023 financial year audit. “I believe this will be in the best interest of the company and allow for greater engagement with shareholders,” he said. Byju also proposed a third-party agency to monitor funds raised through rights issue.
South Africa’s Prosus, Peak XV Partners, General Atlantic, Sofina, The Chan Zuckerberg Initiative, Owl Ventures, and Sand Capital - representing 30% shares in the company issued a joint statement seeking change of board of directors no longer controlled by the founders.
Investors’ EGM invalid: HC
Meanwhile, the Karnataka High Court, in response to a petition filed by Think & Learn Private Limited (the parent company of BYJU’S), has passed an order stating that any resolutions proposed to be passed in the 23rd February EGM called by select investors, as invalid until the final hearing and disposition of this petition.