Akihabara News (Tokyo) — Battle lines have been drawn between Tokyo-based Universal Entertainment Corporation and Miami-based 26 Capital Acquisition Corporation over their October 2021 agreement which would have seen the Okada Manila casino resort listed on the Nasdaq stock market in New York.
The original agreement called for a merger between Universal’s main subsidiary in the Philippines–Tiger Resorts Asia–and 26 Capital Acquisition, a special purpose acquisition company, which would allow the casino resort to be listed on the Nasdaq. The enterprise value for Okada Manila was set at US$2.6 billion, and the agreement involved involved a cash injection of US$275 million.
The October 2021 press release noted that “the transaction is expected to close in the first half of 2022.”
However, this merger schedule was derailed in April 2022 when the Supreme Court of the Philippines ordered that the controversial former owner of both Universal Entertainment and Tiger Resorts, billionaire Kazuo Okada, be restored to the executive role which he had played before being removed under a cloud of scandal in 2017. From the end of May to early September 2022, agents of Okada temporarily seized control of the Okada Manila resort by force.
During that three-month occupation, 26 Capital Acquisition Chairman and CEO Jason Ader made a number of public statements which appeared to be fully supportive of Universal Entertainment.
After Universal Entertainment, backed by the Philippine National Police, seized back control of the casino resort in September, the way appeared to be clear for the agreed merger to proceed and for Okada Manila to gain its Nasdaq listing.
However, months ticked by with no forward movement, and confirmation that matters had gone awry became clear when 26 Capital Acquisition filed a lawsuit this February in the US state of Delaware against Universal Entertainment alleging that the Tokyo firm was unreasonably dragging its feet on consummating the planned merger.
That trial is scheduled to begin today.
Universal Entertainment had been quiet about its own position on its dispute with 26 Capital Acquisition, but that public silence ended dramatically at the end of June with a four-page statement announcing the termination of the October 2021 merger agreement. Universal Entertainment explained that it “came to consider that 26 Capital, during the course of the conclusion of the merger agreement and implementation of transactions under the merger agreement, made material breaches of the merger agreement and engaged in fraudulent misconduct through various misstatements and unauthorized disclosure of confidential information.”
Calabrese Consulting, an accounting firm which advises special purpose acquisition companies, was named as an organization which had allegedly been provided confidential information by 26 Capital Acquisition.
Universal Entertainment also complained that Ader “gave interviews to news outlets in late 2022” without gaining their advance consent, and that he had posted about the merger on his Twitter account.
They also alleged that Ader “pursued a campaign to push the merger to close at all costs, even in violation of US securities laws, because Mr. Jason Ader has extreme financial incentives to close the merger.”
26 Capital Acquisition responded with a short statement last Wednesday, arguing that it “believes that the termination notice is baseless. 26 Capital believes that Tiger Resorts and its affiliates have engaged in repeated contractual breaches to avoid closing, which is the subject of a pending Delaware litigation going to trial on July 10.”
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