Mumbai: Indian hospitality startup Zostel has asked the markets regulator to make public an application by SoftBank Group-backed rival OYO Hotels & Rooms, which went public six years ago due to a legal tussle between firms over a deal.
Zostel said OYO’s capital structure was not final and its draft prospectus filed with the Securities and Exchange Board of India (SEBI) was “full of material defaults,” shows a copy of a letter Zostel sent to Sebi seen by Reuters Is.
Oyo said Zostel’s intervention represented “unnecessary and repetitive attempts to create a false impression”.
“This shows a pattern of Zostel’s attempt to distract Oyo from pursuing its business goals,” it said in a statement to Reuters.
OYO filed papers for an initial public offering (IPO) in late September, which would include a fresh issue of shares worth up to Rs 7,000 crore ($927.30 million) and an offer for sale of existing shares for Rs 1,430 crore.
A source told Reuters this month that it is seeking a valuation of $10 billion to $12 billion.
There is an ongoing legal battle between Oyo and Zostel for Oyo to buy out some of Zostel’s businesses in 2015 and for Zostel to acquire a 7% stake in Oyo.
Although the deal fell through, Zostel has said it is still entitled to the stake, while Oyo has said otherwise, arguing that they have not reached a definitive agreement.
According to a petition seen earlier by Reuters, Zostel has asked a Delhi court to restrain Oyo from changing its shareholder structure through an IPO.
In its letter to SEBI dated October 11, Zostel stated that SEBI regulations bar Oyo from making any public offering of its shares as it had not issued stake to the shareholders of Zostel.
Separately, Oyo has challenged an order of a Supreme Court-appointed arbitrator, which ruled that the terms of the 2015 deal were binding and that Oyo breached its obligations by failing to execute a definitive agreement.
An Oyo lawyer told Reuters late Monday that there was nothing in the order that would prevent Oyo from going ahead with its IPO.
Zostel and SEBI did not respond to requests for comment outside regular business hours.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)