Oyo IPO: Zostel writes to Sebi, seeks rejection of draft offer papers
Oravel is the parent firm of OYO.
Zostel and OYO are involved in a legal battle over a deal between the two companies in 2015.
“The DRHP is replete with material omissions and blatant misstatements, intended to mislead the public into investing into Oravel’s shares without appreciation of the risks involved,” the letter said.
The management, directors, officers and independent directors of Oravel as well as book running lead managers of the IPO have been derelict in their duty to carry out necessary due diligence in the matter resulting in their failure to ensure Oravel’s adherence to the norms and regulations enacted to prevent companies from defrauding the investing public, it added.
OYO had filed preliminary papers with Sebi in September to raise Rs 8,430 crore through an Initial Public Offering (IPO).
The IPO comprises fresh issue of equity shares aggregating up to Rs 7,000 crore and offer for sale to the tune of Rs 1,430 crore.
When asked for comments on the development, OYO said, “after multiple attempts in the courts and arbitration tribunal, Zostel’s communication shows unnecessary and repetitive efforts to create a wrong perception”.
This shows a pattern of Zostel trying to distract OYO from pursuing its business goals, the company said.
“The repeated reliefs being sought are not consistent with an award by the Arbitration Tribunal from March 2021 which has not granted any award for issue of any shareholding in OYO to Zostel,” it noted.
In the letter to Sebi, Zostel also said that it has filed an application for seeking injunction against any change in shareholding of Oravel till the time that Oravel’s challenge to the award and the execution proceedings initiated by Zostel are completed.
“Thus, if the court agrees to not interfere with the award, Zostel’s shareholders will be entitled to get 7 per cent shares in Oravel. That is why we say that the shareholding of Oravel is not yet frozen/ final… Hence, the IPO cannot be permitted to proceed,” it added.
In a statement, the OYO Counsel said, “the award does not direct OYO to issue any shares to Zostel or its shareholders and only holds that Zostel is entitled to take appropriate proceedings for specific performance and execution of the definitive agreements”.
Earlier this year, OYO had challenged the Supreme Court-appointed arbitrator’s award in the Delhi High Court and had said that the ruling of the arbitration tribunal is not maintainable.
The arbitrator’s award had said that the terms of the 2015 deal between the two companies were binding.
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