The breakdown of a deal that would have merged 26 Capital Acquisition Corp. and Philippine integrated resort Okada Manila has resulted in the dissolution of the U.S.-based special purpose acquisition company (SPAC) SPAC.
The move was announced on September 22, two weeks after a Delaware court ruled that Okada Manila was not obligated to complete the merger, as demanded by 26 Capital. With that decision, the SPAC founded by Jason Ader said it would liquidate immediately.
As reported by Inside Asian Gaming, 26 Capital said it would not pay a monthly installment of $275,000 monthly to extend the merger period into October. It added that it would be “vigorously pursuing all available remedies against (Okada Manila), including damages.” The SPAC added that it would redeem all outstanding shares of common stock issued to public stockholders at $10.95 per share.
The presiding judge found that 26 Capital “engaged in conduct that should not be rewarded” as part of its efforts to close the deal, which would have listed the merged entity on Nasdaq.
Okada Manila terminated the agreement on June 30, claiming “various material breaches of the merger agreement and fraudulent conduct by 26 Capital … that were discovered in the litigation process.”
Ader then filed suit against a number of Okada units—Tiger Resort Asia Ltd. (TRAL); Tiger Resort, Leisure and Entertainment Ltd. (TRLEI); UE Resorts International Inc. (UERI); and Project Tiger Merger Sub. Inc., all subsidiaries of Universal Entertainment Corp. of Japan—alleging they failed in their obligation to complete the merger promptly. The suit also asked that Okada Manila be compelled by law to close the deal.
Judge Travis Laster of the Delaware Court of Chancery ruled that forcing the merger could breach a 2022 court decision handed down in the Philippines. That directive ordered TRLEI’s onetime board to be reinstated under the leadership of ousted Universal founder Kazuo Okada. Okada got the boot in 2017 following charges that he embezzled company funds; the Japanese billionaire viewed the “status quo ante order” as authorization to seize control of the Manila property that bears his name.
He and his associates controlled the property—Manila’s largest integrated resort—for three months in mid-2022, from May to September, before being removed by a subsequent court order.
The Delaware court also considered information that 26 Capital never told TRLEI that its chief advisor in the merger, Zama Capital hedge fund founder Alex Eiseman, owned more than 60 percent of a 26 Capital affiliate. “That meant the hedge fund would profit if the SPAC got a better deal” from Universal Entertainment, according to Laster.
“Not knowing that its contractual advisor was playing for the other team, (Universal) entered into the merger agreement,” Laster wrote. “After signing, the target hired the hedge fund to assist with a series of deal-related tasks. When pursuing those tasks, the hedge fund continued to work as the SPAC’s partner and against its client. It was not until this litigation that the target learned the truth.” He described Eiseman’s role with 26 Capital as “a conspiracy to mislead Universal.”
According to Inside Asian Gaming, since 2022 Kazuo Okada has been the subject of “at least” two arrest warrants in the Philippines due to the unlawful seizure of his former property, the largest integrated resort in Manila’s Entertainment City.
