Days before an extraordinary general meeting of beleaguered edtech firm Byju’s is to take place, founder and CEO Byju Raveendran told shareholders in a letter that a rights issue by parent, Think & Learn, has been fully subscribed. The Morning Context could not independently verify if this is true. This context is important because earlier press releases by Byju’s have been misleading. For the edtech major, money is critical. Under a mountain of debt, it urgently needs funds to meet its operational costs.

The company also got a breather from the Karnataka High Court, which said that resolutions proposed to be passed in the 23 February EGM—called by select investors—“shall not be given effect to” till the next hearing. The matter is listed next for 13 March. It basically means that the investors are free to hold the EGM and pass whatever resolution they deem fit, but whether or not these are binding will depend on the court's final decision on Byju's petition.

In its petition, Byju’s claimed that the EGM, in which investors want to pass a resolution against Raveendran and his family, is a conspiracy and violates certain agreements. The company sought an “injunction restraining these shareholders from holding the said EGM and, alternatively, staying the effect of the resolutions that may be passed at such EGM”.

The edtech startup’s financial crisis has put investors at loggerheads with the company’s founders. Earlier this month, key shareholders—General Atlantic, Prosus Ventures, Peak XV Partners and the Chan Zuckerberg Initiative, among others—called for an EGM to remove Raveendran and family from the company’s board. Investors have long urged Raveendran to step aside from an operational role, but this is the first time they have called for his removal from the board. (Also read: Byju’s investors call for EGM to change leadership)

The company said earlier this month that investors do not have the voting rights necessary to effect such a change. The firm went to the extent of saying that its investors are “seeing the crisis” as an “opportunity to conspire” and demand the removal of Raveendran. It then filed a petition under Section 9 of The Arbitration and Conciliation Act, 1996, arguing that certain investors, including General Atlantic, Chan Zuckerberg Initiative, MIH EdTech Investments, Own Ventures, Peak XV Partners (formerly Sequoia Capital India & SEA), SCI Investments, SCHF PV Mauritius, Sands Capital Global Innovation Fund, Sofina and T. Rowe Price Associates, had violated the Articles of Association, the Shareholders’ Agreement and the Companies Act, 2013, by calling for an EGM on 23 February.

Coming to the rights issue, in his letter to shareholders on Wednesday, Raveendran said that the issue was fully subscribed, adding, “I understand that participating in this rights issue may seem like a Hobson’s choice. However, this is the only viable option in front of us today to prevent permanent value erosion.” A rights issue is an offering where existing shareholders can exercise their rights to buy a company’s shares, usually at discounted prices.

The issue was approved last month by the Byju’s board—which consists of Raveendran, his wife Divya Gokulnath and brother Riju Ravindran. The board decided to take this route to raise $200 million at a post-money valuation of $225 million—a staggering 99% cut from its $22 billion valuation. (Also read: Can $200 million really save Byju’s?)

The issue too has had its own set of challenges. After showing their displeasure, key investors such as Prosus and Peak XV Partners haven’t participated in the round, and risk losing their entire stake in the company, a person familiar with the matter told TechCrunch. Raveendran is reportedly putting in $45-46 million to maintain his stake in the company.

Raveendran, in his latest letter to shareholders, agreed to appoint a third-party agency to oversee the use of funds raised from the rights issue. “In order to increase shareholder representation, I commit to restructuring the board and appointing two non-executive directors to the board by the mutual consent of the founder and shareholders—right after the FY23 Audit, which we expect to close by the end of this quarter,” he said.

Read: Byju Raveendran and the art of deception.

Follow our full coverage of Byju’s here.

(With inputs from Pradip K. Saha)