Byju’s secured a legal victory as a Bengaluru civil court rejected a plea by lenders challenging Manipal Group Chairman Ranjan Pai’s acquisition of a 40% stake in Byju’s subsidiary Aakash Institute. The lenders of Byju’s $1.2 billion term loan sought an injunction on Pai’s conversion of a loan of approximately $250-$300 million into equity in Aakash Institute. The challenge surprised both Byju’s and Pai, with lenders petitioning the court due to concerns about the debt-to-equity conversion at a lower valuation of $600 million compared to the $950 million valuation in Byju’s acquisition of Aakash Institute in 2021.
The proposed deal raised concerns among Think & Learn lenders, controlling 80% of the term loan raised by Byju’s in November 2021. The lenders argued that the conversion, if allowed, would hurt their interests. However, the Bengaluru court did not grant an injunction, citing incorrect jurisdiction, and rejected the lenders’ plea. The lenders had cited a credit agreement that allegedly prohibits Think & Learn from selling assets without prior lender approval.
Byju’s confirmed the court proceedings without providing details, stating that the court dismissed the suit filed by the Term Loan B (TLB) lenders against Byju’s. Manipal Group Chairman Ranjan Pai has sought approval from the Competition Commission of India for the deal that makes him the largest investor in Aakash Institute.
The legal battle adds to Byju’s ongoing challenges, including facing an insolvency plea at the National Company Law Tribunal and the bankruptcy filing of its US subsidiary Byju Alpha. Additionally, investor conflicts led to a call for a change in management, which Byju’s vehemently opposed, highlighting the tensions within the company. Despite these challenges, Byju’s secured commitments for over 100% of its proposed $200-million rights issue, indicating investor interest in the company’s future.
