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U.S. SPAC To Proceed With Okada Manila Deal Despite Management Fracas At Philippine Casino Resort

Miami-based 26 Capital Acquisition Corp.—the special purpose acquisition company (SPAC) controlled by investor Jason Ader—aims to complete its merger with Okada Manila this month and list one of the Philippines’ biggest casino resorts later this year despite the ongoing fracas over the management of the property.

“I’m fully committed to this deal,” Ader, chairman and founder of the SPAC, told Forbes Asia via video conferencing from his headquarters in Miami on June 9. Under the deal announced in October, Tokyo-listed Universal Entertainment Corp. will inject Okada Manila into 26 Capital in exchange for an 88% stake in the combined entity dubbed Universal Entertainment Resorts Inc. (UERI) that will be listed on Nasdaq, in a deal valuing the Philippine gaming company at $2.6 billion.

The transaction will be tabled for a vote by 26 Capital’s shareholders on June 28. Once approved, Ader said Okada Manila will proceed to list on Nasdaq under the UERI ticker. 26 Capital, which is investing $275 million in UERI, is pursuing the acquisition despite the ongoing tussle between billionaire Kazuo Okada—founder of Japan’s Universal Entertainment—and his son Tomohiro Okada over the management of the Philippine property.

“I have all indications that the deal will be approved” by 26 Capital shareholders on June 28, Ader said. While Ader wants to complete the merger and listing by the end of this month, Tokyo-based Universal Entertainment said in a regulatory filing on Friday that it plans to delay the deal’s completion until September 30, subject to an amended agreement with 26 Capital.

The delay will give Universal Entertainment some time to regain management control of Okada Manila after a group of people representing Kazuo Okada took control of the property on May 31, enforcing a status quo ante order issued by the Supreme Court to reinstate Okada and his representatives to the board of Tiger Resort and Leisure Entertainment Inc. (TRLEI)—the operator of the casino resort.

Okada founded Universal Entertainment in 1969 as a maker of pachinko machines and casino equipment. However, he was ousted from the boards of the Japanese company and Okada Manila in 2017 amid allegations of misappropriating funds from the Philippine company. A Philippine court cleared Okada of the charges in December.

“It’s a fluid situation,” Ader said. “Our lawyers are watching the developments closely. We’re moving forward with the plan to close the deal. We’re not going to let Kazuo Okada disrupt the biggest listing of a Philippine business on either the New York Stock Exchange or Nasdaq.”

Universal Entertainment and TRLEI had asked the Philippine Supreme Court to invalidate the takeover last month of the property by Kazuo Okada and his business partner tycoon Antonio Cojuangco.

“Prior to the takeover, we were optimistic on the company’s growth following the recovery from the pandemic,” Michiaki Satate, chairman of the ousted TRLEI board, said in a media briefing in Manila on June 6. “Though we continue with our desire to keep the business afloat, the future of Okada is now uncertain.”

Okada Manila said in January that total revenue increased 24% to $399.6 million in 2021 from the previous year, bolstered by strong gaming revenues particularly in the fourth quarter as well as contributions from its retail, entertainment and dining outlets. Universal Entertainment separately said in February the Philippine property narrowed its operating loss to 1.87 billion yen ($16.3 million) last year from a loss 9 billion yen in 2020.

Despite the ongoing shareholder dispute, Okada Manila said its occupancy levels at its hotel are well above 90% during weekdays and even higher during weekends.

“With the property’s operations in full gear and abuzz with activities, Chairman Kazuo Okada plans to sustain the positive gains that Okada Manila has achieved so far,” the company said in statement on June 10. The group representing Kazuo Okada did not respond to Forbes Asia’s request for comment on plans by Universal Entertainment and 26 Capital to proceed with the proposed listing of Okada Manila in Nasdaq.

With a development budget of $3.3 billion, Okada Manila has been opening progressively and currently operates nearly 35,000 square meters of gaming space with 599 gaming tables and 4,263 electronic gaming machines. When fully completed, the casino resort will have 974 gaming tables and 6,890 electronic gaming machines. It will also feature two towers with 993 hotel rooms, a retail boulevard with more than 50 shops, Cove Manila night club and indoor beach club, more than 25 dining options, and one of the world's largest multi-colored dancing and musical fountains.

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