The Delhi High Court on Monday nixed a plea filed by hostel chain Zostel (Zo Rooms) seeking to restrain OYO Hotels and Homes from proceeding with its initial public offering (IPO) process, claiming that the former has seven per cent shareholding in the tech hospitality major.
Justice C. Hari Shankar dismissed the plea of Zostel, seeking an interim order to restrain or injunct OYO from modifying its shareholding structure or cap table including by way of an Initial Public Offering (IPO).
The dispute between OYO and Zostel dates back to 2015 when they had begun negotiations for a merger but the talks fell through. This eventually led to the arbitration.
The two companies were at loggerheads over the arbitration award. OYO’s contention that the Arbitration Tribunal adjudicating the dispute between the two entities has granted no specific relief to Zostel in terms of receiving ownership in the hospitality major.
This was a result of OYO calling off its acquisition of Zostel Rooms citing the inability to reach an outcome to identify potential value in the latter’s business after due diligence.
Zostel had said that its shareholders are entitled to seven per cent mirror-image shareholding in the OHHPL (Oyo Hotels and Homes Private Ltd) as per the terms of the scheme of demerger of OYO’s (Oravel Stays Private Ltd) “Indian Business” into the OHHPL, approved by the NCLT Ahmedabad. So, any market offer should only follow the implementation of this scheme.
Oyo also sought in the High Court a stay on an earlier order from a Supreme Court-appointed arbitrator who had said that Oyo was in breach of its agreement with smaller rival Zostel over the proposed acquisition.