Posted on: February 7, 2023, 07:48h.
Last updated on: February 7, 2023, 07:48h.
Jason Ader’s special purpose acquisition company (SPAC) 26 Capital Acquisition Corp. (NASDAQ: ADER) revealed today that it is pursuing litigation against Universal Entertainment and other parent firms of Okada Manila for failure to act on a merger accord that was reached in October 2021.
Among the entities named in the suit is Japan-based Universal Entertainment, which is the overall parent of the Philippine casino-resort.
On February 2, 2023, 26 Capital Acquisition Corp. filed a complaint in the Delaware Court of Chancery seeking a grant of specific performance ordering the UEC Parties to specifically perform their obligations under that certain Agreement and Plan of Merger and Share Acquisition Agreement, by and among the UEC Parties and 26 Capital, dated as of October 15, 2021, as amended,” according to a Form 8-K filing made by the blank-check company with the Securities and Exchange Commission (SEC).
In October 2021, 26 Capital and Okada Manila, the world’s only Japanese-owned integrated resort, announced merger plans in a deal valuing the casino operator at $2.6 billion.
Okada Manila Merger Beset By Delays
The merger between the SPAC and Okada Manila, which would pave the way for the latter to list on the Nasdaq, is taking a long time by the standards of blank-check combinations.
One of the primary reasons the SPAC boom flourished in 2020 and 2021 is because blank-check mergers allow the targeted company to go public more rapidly than is the case in traditional initial public offerings (IPOs). Additionally, the SPAC investors anticipate that they’ll be rewarded when the transaction is completed, perhaps underscoring why 26 Capital wants to bring the Okada Manila deal across the finish line.
However, billionaire Kazuo Okada has stood in the way of that happening. He even attempted to seize control of the integrated resort last May using 50 private security guards and members of the Paranaque City Police.
Last October, 26 Capital announced plans to delay the merger by a year. In that same month, Okada faced coercion charges in a Philippine court.
26 Capital Wants to Consummate Okada Manila Deal
While the aforementioned agreement to extend the merger deadline signaled a conciliatory tone and willingness of both 26 Capital and Universal Entertainment to complete the transaction, there’s no denying the SPAC wants to get the deal done.
It said it’s willing to use “reasonable best efforts to consummate the business combination (the “Business Combination”) in accordance with the terms of the Merger and Share Acquisition Agreement,” according to the SEC filing.
The regulatory document doesn’t confirm as much, but some of urgency could be born out of a rebound in tourism to the Philippines, which could positively impact earnings and revenue at Okada Manila. However, until it becomes a publicly traded entity, it’s impossible for a broad investor base to reward the casino operator for top and bottom line growth. Ader previously indicated Okada Manila could eventually pursue projects elsewhere in the Asia-Pacific region as well as in the US.
Todd Shriber
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