Oravel Stays, parent of Oyo has written to the market regulator refuting all the allegations made by Zostel Hospitality. Zostel had written to the Securities and Exchange Board of India (Sebi) to reject Oyo’s draft red herring proposal.
In a letter to Zostel that Business Standard has viewed, Oyo said: “We deny in toto all the allegations levelled by you against us in the Complaint. The Complaint is replete with patently false statements and self-serving half-truths, and is a deplorable attempt to adversely impact the proposed Offer and coerce the Company into granting Zostel’s shareholders an entitlement to shareholding in the company that they failed to obtain in the arbitration proceedings between Zostel, its founders and shareholders and the company and the arbitral award dated March 6, 2021, issued by the sole arbitrator, Justice A M Ahmadi (Retd).”
On October 11, Zostel has written to Sebi and said “the IPO is non-maintainable as Oravel’s capital structure is not final.”
In the response to Zostel, Oyo further stated, “The capital structure of the company is firm and accurately reflectied in the DRHP. As of date there are no shares to be issues to Zostel’s shareholders as the Award does not direct issuance of the company’s shares to the shareholders of Zostel.”
The root of the dispute between the two parties lies in a failed buyout deal six years ago, which Zostel claims was binding on Oyo.
Oyo mentions in the letter that both the parties—Oyo & Zostel—had mutually agreed to terminate the agreement. “…terminated by Zostel pursuant to email dated September 17, 2016 and agreed to by the company pursuant to email dated September 19, 2016. Both parties commenced negotiations on new terms, which were never finalised.”
Zostel confirmed the receipt of the letter. It did not immediately respond to a request for comment.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.