Oravel Stays Ltd, a unicorn in the hospitality sector, which provides hotel rooms and residential space under the OYO brand name, may face a setback. Zostel, the company that runs Zostel Hostels and ZO Rooms, has sought SEBI to quash the DRHP of Oravel Stays Ltd. Oravel Stays Ltd, which runs the OYO brand, has filed draft papers with SEBI for an IPO of Rs 8430 crore.
Zostel told SEBI, Oyo is misleading
Zostel has said in the letter written to SEBI that many things have not been mentioned in the draft paper of Oyo filed with SEBI. There are serious misstatements in this. In this, investors were misled to invest money in OYO’s IPO without assessing the risk. Zostel is to get 7 per cent stake in Oyo’s parent company. A tribunal adjudicating in this matter had asked Oravel Stays Ltd to transfer the stake to Zostel but this step has not been taken so far.
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Zostel accuses Oyo of not transferring stake
Zostel has said that in 2015, there was a merger agreement between Zostel Hospitality, Zo Rooms and OYO. After this, according to an agreement signed on 26 November 2015, Zostel Hospitality transferred its business to OYO after fulfilling its obligations, but according to the agreement, Oyo did not transfer 7 percent stake of the company to it. Oravel Stays Ltd, the company that runs OYO, has said in the draft paper that its legal battle with Zostel could affect its business. This is a risk in its business. On 10 April this year, Oravel Stays Ltd had sought a stay challenging the decision of the Arbitral Tribunal. Oravel Stays Ltd has said that Zostel is trying to create a false impression by going to the Tribunal and the High Court.
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