Universal Entertainment Corporation (UEC) and its affiliates have taken steps to end their plans to merge the Okada Manila resort in the Philippines with a US-based Special Purpose Acquisition Company (SPAC) that would have enabled the casino operator to list on the NASDAQ.
In recent legal action filed with the Delaware Court of Chancery, UEC and its related entities Tiger Resort Asia Ltd (TRA), Tiger Resort, Leisure and Entertainment, Inc. (TRLEI), UE Resorts International Inc. and Project Tiger Merger Sub Inc. are countersuing Jason Ader’s 26 Capital Acquisition Corp. (NASDAQ: ADER) – the blank-check company with which the gaming operator had signed a merger agreement in October 2021.
The UEC Parties are seeking a remedy to the breaches they allege have been committed by the SPAC promoter, and are seeking declaratory relief that will enable them to separate from this allegedly dishonest and untrustworthy entity, according to a court filing.
UEC’s move follows 26 Capital suing the Japanese company for its alleged failure to act on the merger agreement. Typically, SPAC mergers are closed within months of being announced, but it has been 18 months since the deal was revealed and it has yet to be completed.
UEC’s suit against 26 Capital, in which it accuses the SPAC of trying to close the transaction for its own benefit, extends the ongoing saga between the two parties. UEC claims in its lawsuit that the SPAC is attempting to paint an overly optimistic picture of Okada Manila’s business prospects in order to keep its shareholders committed to the merger, which requires their approval for it to be finalized.
Kazuo Okada, the Japanese billionaire for whom the gaming venue is named, had previously tried to block the merger and even attempted to seize control of the integrated resort last May with the help of 50 private security guards and members of the Paranaque City Police. 26 Capital responded by announcing that it would delay the merger up to a year.
In addition to seeking unspecified damages, UEC is asking the court to nullify the merger agreement, alleging “material breaches and fraudulent conduct” on the part of 26 Capital.
While there are many examples of gaming SPAC deals being unsuccessful, there has been no precedent of a court forcing two sides to execute a merger when one opposes it. UEC had previously said it wanted the merger to be completed, but it is yet to be seen if the court will hold them to that.