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.
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.
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.