Attention! OYO's deadline for bonus issue application has been extended
What's the story
OYO has announced an extension to the application deadline for its bonus issue, related to its upcoming IPO. The new date is now November 7, instead of the earlier November 1. The decision comes after feedback received during the postal ballot process, with OYO wanting to give investors enough time to select their preferred bonus option.
Issuance details
Two options for preference shares
Under the bonus issue, shareholders will get one preference share for every 6,000 equity shares they hold. They can choose between a fixed conversion option (where each such share converts into one equity share), or a milestone-linked option (the milestone being the appointment of bankers for its potential IPO during this fiscal year).
Eligibility criteria
Major shareholders excluded from bonus issuance
OYO has said that SoftBank Vision Fund and Ritesh Agarwal's entities, which hold majority stakes in preference shares, are not eligible for this bonus issuance. The company also said that the total dilution from this bonus issuance is capped at a maximum of 5% of total share capital on a fully diluted basis.
CCPS explained
Understanding difference between CCPS and earlier equity bonus
CCPS, or Compulsory Convertible Preference Shares, is a hybrid security that combines debt and equity. It requires conversion into equity shares at a predetermined time or upon the occurrence of certain events. OYO's bonus CCPS differs from the earlier 1:1 equity bonus and aims to reward equity holders who have faith in the company's IPO journey, while also providing some benefits to those who don't choose the milestone-based option.