BENGALURU :
Zostel Hospitality Pvt. Ltd., which owns Zostel Hostels and ZO Rooms, has filed a rejoinder with markets regulator Securities and Change Board of India (SEBI), alleging that hospitality unicorn, Oyo has but once more ‘misrepresented the authorized details’ and ‘misled the authorities’ in regards to the acquisition deal between each events.
Responding to Zostel’s rejection plea in the direction of the preliminary public providing (IPO), Oravel Stays Ltd, which runs Oyo lodges mentioned on October 22 that the 2 events had “mutually agreed” to terminate the acquisition deal in 2016.
In a recent letter to SEBI on Tuesday, Zostel alleged Oyo’s response to be a ‘depressing effort’ to re-contest the factual and authorized place that has already been held towards Oyo.
Zostel has additional alleged that the paperwork supplied by Oyo have already been reviewed by a tribunal earlier than passing a judgement in its favour.
“Upon a studying of the Award, it turns into abundantly clear that the OYO Response consists solely of Oyo’s arguments superior earlier than the Tribunal, all of which have been categorically rejected. Accordingly, what’s cited by OYO within the OYO Response, is extracts from their very own pleadings or arguments – all of which have been thought of and rejected by the Tribunal ,” mentioned Zostel in a letter to SEBI on Tuesday night.
In March this 12 months, an arbitral tribunal dominated in favour of Zostel, calling the time period sheet that promised ZO Rooms’ shareholders 7% of hospitality unicorn Oyo as a binding doc.
ZO Rooms and Oyo had entered into talks for a merger in 2015, executing an settlement on 26 November that 12 months, in accordance with Zostel Hospitality. ZO Rooms accomplished its obligation below the settlement and transferred the enterprise, however Oyo didn’t switch 7% to the ZO Room’s shareholder, Zostel had alleged earlier.
Oyo mentioned that the deal was referred to as off due to numerous points, together with “non-completion of the due diligence course of” and “transaction structuring” raised by Zostel, Oravel Stays mentioned in its written response to Sebi on 22 October.
On 10 April this 12 months, Oyo challenged the tribunal’s choice and sought a keep on the implementation of the award from the Delhi excessive courtroom.
Since then, Zostel has additionally filed recent petitions with the Delhi excessive courtroom for execution of the award supplied by the tribunal and an utility for interim aid barring Oyo from altering its shareholding.
“Thus, it’s reiterated that if the Court docket (Delhi excessive courtroom) agrees to not intrude with the Award, Zostel’s shareholders will probably be entitled to get 7% shares in Oravel. That’s the reason we are saying that the shareholding of Oravel just isn’t but frozen or last. In view of the failure to supply for the awarded 7% shares in favour of Zostel shareholders. Therefore, the IPO can’t be permitted to proceed,” added Zostel’s letter to SEBI on Tuesday.
Mint has seen a duplicate of the letter despatched by Zostel to SEBI.
Oyo and Zostel didn’t reply to Mint’s queries on the time of publishing the article.
“As per the regulation laid down by the Supreme Court docket, the Court docket listening to the problem to the award can not “reappreciate” deserves of the matter / proof that has already been checked out by the Arbitrator in passing of the award in favour of Zostel. Solely these authorized points may be checked out by the Court docket that hit facets of public coverage. It’s thus malafide on behalf of Oyo to ship the identical background documentation to SEBI, which has already been thought of by the arbitrator whereas granting the award”, mentioned Abhishek Malhotra, managing accomplice, TMT Legislation Apply, which is representing Zostel.
“If Oyo goes forward with the IPO, the award will grow to be infructuous, and Zostel will be unable to say its share in Oravel Stays, as a result of the grant of seven% will probably be not possible to acquire,” defined Malhotra.
Final month, Oravel Stays filed the paperwork for its ₹8,430 crore share sale that’s anticipated to worth the operator of the hospitality unicorn Oyo Lodges and Houses not less than at $10 billion. The preliminary share sale will see a few of its buyers, together with Japan’s SoftBank Group, promote part of their stake.
Supply: Live Mint