Edtech major Byju’s has denied allegations made by its lenders that its US entity, Byju’s Alpha, has hidden $533 million in an obscure hedge fund, Camshaft Capital Fund, based out of a Miami IHOP restaurant. The company said it has not recived any lawsuit copies.
The lenders have argued in a Miami-Dade Country Court in Florida that Byju’s has deliberately hidden the funds to obstruct and delay creditors. They said the fund’s founder, William C. Morton, has been acquiring luxury cars since the money transfer took place, reported Bloomberg.
“For record, the Byju’s entities are not parties to the proceedings mentioned in the recent media reports, and have not been served with copies of the complaint or motion. This is the first that we are hearing of these proceedings. The court filing appears to have been made prior to the latest loan repayment proposal. The parties continue to engage in negotiations to settle the dispute and we remain committed to an amicable outcome,” said Byju’s in its statement.
The beleaguered edtech major said that Byju’s Alpha has made investments in a ‘multi-hundred billion dollar fund’ with high security fixed income instruments. The company said that the credit agreement with the lenders does not prohibit or restrict the movement or investment of monies disbursed thereunder.
“There is no requirement for BYJU’S to maintain cash as collateral,” the statement added.
Term Loan B fiasco
Byju’s took a $1.2-billion Term Loan B for a tenure of five years with a yield to maturity (YTM) of 6.78 per cent in November 2021. It had skipped its $40-million loan repayment on June 5 of this year and later sued its lenders, alleging predatory tactics.
In June this year, a Delaware court in the US gave a decision in favour of Byju’s as the court denied a request by Term Loan B lenders to investigate the matter of a $500-million transfer from its US-based subsidiary, Byju’s Alpha, to other entities.
Earlier this week, the edtech decacorn has put two of its assets, Epic and Great Learning, on the chopping block to generate about $750-800 million, as the company looks to repay the $1.2-billion Term Loan B, reported businessline.