Edtech firm Byju’s on Wednesday said it has invested the residual money from its term loan B (TLB) into ‘high-grade fixed income assets’ in the US.
The Bengaluru-based firm responded to an allegation that the company hid $533 million in an obscure three-year-old hedge fund, operating from a pancake restaurant in Miami.
Byju’s said its offshore subsidiary remains the beneficiary of the money invested in high security fixed income instruments invested with a multi-hundred billion dollar fund in the US, according to a report by Bloomberg.
Byju’s lenders alleged that the $533 million dollars is a collateral for a $1.2 billion loan. The company responded in a statement that its credit agreement with the lenders did not prohibit or restrict the usage, movement or investment of funds disbursed.
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Also, “there is no requirement for Byju’s to maintain cash as collateral,” it added.
The lenders have further accused the edtech of investing the money in a hedge fund called Camshaft Capital Fund, started by one William C Morton, who apparently had no formal training in investing.
Since the fund transfer, luxury cars—a 2023 Ferrari Roma, a 2020 Lamborghini Huracán EVO, and a 2014 Rolls-Royce Wraith—have been registered in Morton’s name, according to court papers cited in the report.
Earlier in the week, Bloomberg had also reported that Byju’s had made a surprise repayment proposal to lenders, in which the firm has offered to pay back its entire $1.2 billion term loan in less than six months. For nearly a year, Byju’s and its lenders have made headlines for disagreements and failed negotiations concerning the TLB.
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In June, Byju’s had skipped a $40 million interest payment and filed a lawsuit in New York, accusing the lenders of “bad-faith negotiating.” In its suit, Byju’s sought to “disqualify” lender Redwood, which allegedly had resorted to “predatory tactics”, and consistently increased its exposure by acquiring a sizable stake in the TLB with the intent of making windfall gains.
