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Byju’s moves HC against NCLT order on rights issue | India Business News

MUMBAI: Troubled edtech startup Byju’s has moved the Karnataka high court challenging the National Company Law Tribunal’s order restraining it from going ahead with the second tranche of its $200-million rights issue. Byju’s declined to comment.
In a fresh order issued earlier this month, the Bengaluru bench of the NCLT had directed the startup to not proceed with the second tranche besides restricting it from using any funds that have been collected since the opening of the issue on May 13.The NCLT also directed the company to maintain status quo with regard to existing shareholders and their holding.
The second tranche is part of the issue through which the cash-starved company sought to raise $200 million. With certain investors not participating during the first round, the issue was not fully subscribed and hence split into two tranches. In the second round, the unsubscribed portion was put up for existing investors to invest on a super pro rata (a provision which allows investors to buy a larger percentage of the company) basis.
In their petition, a group of Byju’s investors have reiterated that due to the siphoning off funds by the startup’s management, the company is in “dire straits” and therefore, they should not be allowed to raise further money.
Earlier this year, Byju’s had launched its $200-million rights issue at a valuation of $225-230 million, a 99% drop from its peak valuation of $22 billion. A section of investors including Prosus, Peak XV Partners, Sofina and General Atlantic have been opposing the rights issue since the outset.
In an interim order issued in late Feb, the NCLT had directed Byju’s to keep the funds raised as part of the first tranche of its rights issue in a separate escrow account while also restraining the firm from withdrawing them till the disposal of the suit filed by its investors.

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