Bangalore : Zostel Hospitality Pvt. Ltd., which owns Zostel Hostels and ZO Rooms, has written to market regulator Securities and Exchange Board of India (SEBI), urging it to reject the draft prospectus filed by hospitality unicorn Oravel Stages Ltd., which is under the brand OYO conducts and suspends the subsequent proposed initial. public offering (IPO).
Explaining the reason for its request, Zostel said that OYO’s “IPO is non-maintainable as the capital structure of Orawell is not final”.
“Accordingly, in view of the conditions contained under regulation 5(2) of the Securities and Exchange Board of India’s Capital and Disclosure Requirements (ICDR) Regulations, 2018, Orawell’s filing of DRHP is illegal under the circumstances. The shareholders of Zostel have their side Right to issue in the U.S., 7% of Orawell’s equity securities. Orawell has failed to provide this and is therefore prohibited from making any public offering of its shares,” Zostel said in the letter.
Mint reviewed a copy of the 98-page letter sent by Jostel to Sebi. In the letter, Zostel has also alleged that (OYO) DRHP is replete with material omissions and blatant misstatements, aimed at misleading the public into investing in Orawell’s shares without appreciating the risks involved. Is. In March, an arbitral tribunal ruled in favor of Zostel, calling the term sheet that promised ZO Rooms shareholders 7% of hospitality unicorn Oyo as a binding document.
According to Zostel Hospitality, ZO Rooms and Oyo were in talks for a merger in 2015, a settlement reached on November 26 of that year. Zostal had earlier alleged that Zoe Rooms fulfilled its obligation under the agreement and transferred the business, but Oyo failed to transfer 7% to Zoe Rooms’ shareholder.
while filing its draft prospectus for its $1.2 billion ( ₹8430 crore) IPO, Oyo cited that the legal proceedings involving Zostel as one of several risk factors that could materially and adversely affect its business.
On 10 April, OYO challenged the decision of the arbitral tribunal and sought a stay on the implementation of the award with the Delhi High Court.
“OYO condemns the misrepresentation of the facts of the case of Zostel, and this is an attempt to quash the proceedings of the Delhi HC. After several attempts in the courts and arbitration tribunals, Zostel’s communication shows unnecessary and repetitive attempts to create a false impression. This shows that Zostel is trying to distract Oyo from meeting its business goals,” Oyo said while responding to Mint’s queries on the matter.
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