Bjyu's asked not to sell 6% stake in its subsidiary Aakash over breach of loan terms

Embattled edtech major Think and Learn, which owns Byju's brand, has been asked by an emergency arbitrator not to sell around 6 per cent stake in its subsidiary Aakash Education Services Limited as it has failed to pay back around Rs 350 crore raised from Ranjan Pai-led MEMG Family Office. Arbitration proceedings were initiated by the MEMG Family Office in March to protect its rights, as per the undertaking given by Byju's at the time of securing the loan.

"The emergency arbitrator has asked Byju's not to transfer or create any rights on around six per cent stake in Aakash as per the undertaking given by the company at the time of raising around Rs 350 crore loan from MEMG Family Office," a legal representative aware of the development told news agency PTI. The representative said that the directions were issued on April 4 by an emergency arbitrator, appointed under Singapore International Arbitration Centre rules, in India.

The representative said that the directions were issued on April 4 by an emergency arbitrator, appointed under Singapore International Arbitration Centre rules, in India.

However, a source at Byju's said that the arbitration order largely preserves the status quo and is by no means detrimental to the value of either AESL or Think and Learn.

"The arbitration process by MEMG is procedural in nature, and the team at Byju's is in talks to resolve it keeping the companies' best interests in mind," the source said.

Byju's has been facing a liquidity crunch post-pandemic and has been struggling to pay the salaries of employees.

In April 2021, Byju’s had acquired Aakash in a deal that had a 70 per cent cash component and 30 per cent equity component. The merger was planned as a part of the cash-and-stock deal, when the embattled edtech Byju’s had acquired the brick-and-mortar test prep company for $940 million. That implied that promoters of Aakash and private equity firm Blackstone would have got shares of Think & Learn. The share swap is meant to complete this deal.

Last month, during the National Company Law Tribunal (NCLT) hearing, Think and Learn and Aakash Educational Services Ltd (AESL) withdrew the merger petition.

“The petition to withdraw the merger approval was a pre-planned and mutually agreed process. Both companies were running independently as separate entities under the Think and Learn brand and continue to do so. What happened at NCLT today was procedural to complete the required formalities,” said Byju’s spokesperson.

The share-swap deal has hit a roadblock after the Chaudhry family (founders of Aakash) refused to exchnage their remaining stake in Aakash citing governance issues. Byju’s has also sent a legal notice to the founders of the test prep chain due to their alleged resistance to complete the share swap.