26 Capital Calls Okada Manila Countersuit ‘Desperate’ Strategy
Posted on: March 21, 2023, 02:44h.
Last updated on: March 22, 2023, 01:32h.
Jason Ader’s 26 Capital Acquisition Corp. (NASDAQ: ADER) called a recent countersuit by the casino’s parent company “desperate.” That’s the same blank-check company attempting to bring Okada Manila public in the US.
The special purpose acquisition company (SPAC) was recently hit with litigation by Okada Manila parent Universal Entertainment Corp. (UEC) and related affiliates in the Delaware Court of Chancery. The suit filed by UEC and the other parties alleges that 26 Capital is rushing to bring the integrated resort public and may have skirted US securities laws.
The counterclaims are nothing more than a desperate litigation strategy to deflect from UEC’s own improper conduct. We look forward to proving them wrong at the trial in July — if their counterclaims even get that far,” according to a statement issued Tuesday by 26 Capital.
The blank-check deal values Okada Manila at $2.6 billion, and if ever consummated, would pave the way for the casino-resort entity to trade on the NASDAQ under the ticker “UERI.”
26 Capital Says UEC Not Performing Needed Work
In October 2021, Ader’s SPAC and UEC announced merger plans for Okada in what was, at that time, one of the richer deals involving a gaming company and a blank-check firm. Universal Entertainment, the Japanese pachinko giant, agreed to roll 100% of Okada Manila’s equity into the newly formed company, and 26 Capital said it would provide up to $275 million in cash to the business.
Since then, the transaction has been beset by setbacks, including a 2022 physical takeover of Okada Manila by Kazuo Okada — the man for whom the venue is named — and his associates. That was followed by more legal wranglings and an accounting controversy, which some market observers speculated endangered the SPAC deal.
Fast-forward to today, and 26 Capital claims the UEC countersuit is no more than obfuscation on the part of the Japanese company to hide the fact that it’s not doing the legwork necessary to bring the merger across the finish line.
“26 Capital filed a lawsuit against UEC’s affiliates in February because they were not honoring their contractual obligations and refusing to do the work required to close,” said the SPAC in the statement.
What’s Next in Okada Manila Saga
The Delaware Court of Chancery may toss UEC’s countersuit or rule in favor of 26 Capital, but that remains to be seen. For the court to rule in favor of terminating the deal, which is what the Japanese company apparently desires, the ethical improprieties UEC claims 26 Capital committed will need to be proved.
On the other hand, the court could rule that UEC is intentionally dragging its feet for no good reason, potentially endangering 26 Capital investors in the process.
The SPAC’s desire to complete the transaction is understandable. Okada Manila is growing, the venue is profitable, and the deal could pave the way for future expansion opportunities in the US and Asia-Pacific.
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