Preparing to file a draft prospectus for an initial public offering (IPO) of $1-$1.2 billion, is further a legal impediment once being introduced by an opponent stayed (so roman) on a failed takeover deal, which is to be heard in court on Wednesday.
Hospitality startup Zoe – which claims Oyo is in breach of a binding agreement for a buyout deal dated six years ago – has now approached Delhi High Court Seeking redress in a move that could potentially be an extension of the operations of IPO-bound OYO.
Speaking to ET, Zoe Rooms’ legal counsel said she filed an application in a court in late August, seeking “an interim order to restrain or restrain Oyo from modifying its shareholding structure or cap table. IPO”
ET has reviewed a copy of Zoe Rooms’ application.
The Delhi HC, which is expected to hear the matter on Wednesday, will also take up a petition by Oyo to stay the Supreme Court-appointed arbitrator’s earlier order, which had said that
Oyo was in breach of its agreement with smaller rival Zoe Rooms Both the petitions on the proposed acquisition have been linked for hearing on Wednesday.
In his judgment on the matter in March, former Chief Justice of India AM Ahmadi had said that the term sheet between OYO and Zoe was binding and OYO stopped taking steps to meet the obligations under the term sheet after a point. Had given.
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ET had earlier reported that Gurugram-based Oyo is
Aim to file draft Red Herring Prospectus (DRHP) This week but it could extend to next week as well.
OYO, as the dispute landed in court, has said that the disputed term sheet was non-binding, it has challenged the arbitrator’s order, with the hearing now expected on Wednesday. The arbitrator’s order stated that Zoe is “entitled” to take “appropriate action” for its rights and work towards executing a “definitive agreement” with OYO for itself and its shareholders.
In her petition to the Delhi HC in August, Zoe Rooms has cited reports on Oyo’s investment from Microsoft as well as its planned IPO. “An issuer shall not be eligible to make an initial public offering if there is any outstanding convertible securities or any other right that entitles any person with any option to receive equity shares of the issuer..”
“This makes it sufficiently clear that OYO will not be eligible to make an IPO as Zostel (Like this Zoe’s legal advisor told ET, “Rooms) will certainly be entitled to “any other right which Zostel would be entitled to with any option to acquire equity shares of OYO”.
Ideally, therefore, ‘Oyo should not be allowed to file the DRHP until its challenge for the award is decided,’ he said.
Oyo counter
Oyo’s legal counsel, in turn, told ET that the petition has been filed by Zostel, seeking a ‘relief which is outside the purview of the award’.
“This award does not confer any relief to Zostel or its shareholders which entitles them to OYO to freeze their shareholding pattern in any manner whatsoever. OYO’s stand is that this petition is not maintainable and no matter without merit,” it said.
old dispute
Dispute between SoftBank-backed Oyo (formerly Orwell Stages) and Zo Rooms
Goes back to 2015 when the two companies started talks for a merger But the talks failed. This eventually led to arbitration.
Zoe has cited the arbitrator’s order to say that it is eligible for a 7% stake in Orawell. OYO has always denied the validity of any such claim. ET reported last week that
OYO aims for valuation of around $12 to 15 billion in IPO. Oyo’s final valuation in September was $9.6 billion and a 7% stake in it would be valued at around $672 million.
OYO in its statement to ET refuted Zoe’s comments ahead of the hearing and said, “After several attempts in courts and arbitration tribunals, Zostel has continued its efforts to create a false impression”. Oyo’s statement said this reflects a pattern of Zostel trying to distract Oyo from meeting its business goals.
Responding to ET’s queries on Zoe’s claims of blocking Oyo’s DRHP, Oyo’s legal representative said that this was false and was ‘completely misleading and based on conjecture’.
The person said, “Without considering the grounds of challenge of the award by OYO, the award in itself does not issue any shares in OYO to Zostel or any of its shareholders.”
According to Oyo’s legal counsel, “the only relief, apart from the cost paid to Jostel, is to execute definitive agreements and initiate “appropriate proceedings” to seek specific performance of the term sheet,” the statement said.
“As such, unless the parties come to an agreement on the terms of certain agreements and the same are executed, there shall be no right in favor of either party to the shares of any kind to be issued in OYO. It happens.”
The Company reiterated that the entire process (acquisition) was only at the exploratory discussion stage, and no definitive agreement between the parties had been finalized or executed.