Mumbai: Indian Hospitality start-up Sostel has asked the market regulator to reject the application of SoftBank Group-backed competitor Oyo Hotel & Rooms following a legal dispute between the companies over a deal struck six years ago.
Zyotel said Oyo’s capital structure was not final and that the draft proposal submitted to the Securities and Exchange Board of India (SEBI) was “full of material deficiencies”.
Oyo said Jostalin’s intervention reflects “unnecessary and repeated attempts to create a misconception.”
“It shows a pattern of trying to divert Jostel Oyo from pursuing its business goals,” it told Reuters in a statement.
OYO has set a target of Rs. Includes new issue of shares up to Rs 7,000 crore ($ 927.30 million) and offer to sell existing Rs 1,430 crore shares.
A source told Reuters this month that it was seeking an estimate of $ 10 billion to $ 12 billion.
Oyo and Jostel are in a deal to buy some of Jostel’s businesses for Oyo in 2015 and Jostel is in a legal battle to acquire a 7% stake in Oyo.
Zostel claims that it still has a stake in the deal, even though it was abandoned, while Oyo said otherwise, arguing that they had not reached a firm agreement.
In a petition previously seen by Reuters, Sostel asked a Delhi court to stop Oyo from changing its partner structure, including the IPO.
In a letter to SEBI dated October 11, SEBI’s rules prohibit Opio from publicly offering its shares to Sostelin’s shareholders.
Separately, Oyo has challenged the order of the arbitral tribunal appointed by the Supreme Court, which ruled that the terms of the 2015 agreement were binding and that Oyo violated his obligations by failing to comply with a firm agreement.
Late on Monday, Oyo adviser told Reuters that Oyo was not in line to prevent it from moving forward with its IPO.
Jostel and Sebi did not respond to requests for comment outside of normal business hours.
(This story was not edited by NDTV staff and was created automatically from a syndicate feed.)