Universal Entertainment Subsidiaries Faces Lawsuit For Failing to Carry Out Merger
- 26 Capital sued TRLEI for failing to promptly consummate their merger deal
- The merger has been delayed due to the illegal takeover of Okada Manila by Kazuo Okada’s camp
- Universal Entertainment will properly review lawsuit in detail before responding
Universal Entertainment Corp has revealed that some of its subsidiaries have been sued by a US-listed special purpose acquisition company (SPAC) for alleged breach of a merger agreement.
26 Capital Acquisition Corp had filed a lawsuit against Okada Manila promoter Tiger Resort Leisure and Entertainment Inc. (TRLEI), UE Resorts International Inc. and two other units on February 2 in the US state of Delaware.
The lawsuit stems from a merger deal between TRLEI and 26 Capital announced in October 2021 which would make Okada Manila a publicly-traded company listed on Nasdaq.
The merger transaction was supposed to be completed by the end of June 2022 but faced multiple delays, mainly due to the “illegal” takeover of Okada Manila by the camp of its ousted founder, Kazuo Okada on May 31, 2022.
The Japanese gaming tycoon and his associates proceeded to run the casino resort for three months. In September 2022, the governance of Okada Manila was returned to Universal Entertainment Corp under an order from the Philippine Amusement and Gaming Corporation (PAGCOR), the country’s gaming regulator.
In the same month, Universal Entertainment announced that the deadline for the merger agreement had been moved to September 20, 2023. The company pledged to “promptly” exercise its merger obligations and complete the transactions before the deadline “once the environment to do so is in place”. But the completion of the merger has once again been delayed, prompting 26 Capital to initiate legal action.
26 Capital was founded by Jason Ader, also the current CEO of the New York City-based investment management firm SpringOwl Asset Management. He previously served as an independent director for casino operator Las Vegas Sands Corp.
Universal Entertainment To Review Lawsuit
According to Universal Entertainment, 26 Capital is asking the court to declare that its subsidiaries have “breached” the obligation to consummate the merger promptly as part of the agreement. The company said it will scrutinize the lawsuit and properly deal with it.
Based on figures from TRLEI, Okada Manila’s gross gaming revenue (GGR) for Q4 of 2022 rose to almost PHP10.50 billion from the PHP7.01 billion recorded in the same period in 2021. The casino resort’s GGR for the whole year hit PHP34.34 billion, up 81.5% from PHP18.92 billion in 2021.