A long-planned merger of Philippines integrated resort (IR) operator Okada Manila and U.S. special purpose acquisition corporation (SPAC) 26 Capital is unraveling, with suits and countersuits from the one-time would-be partners.
In February, 26 Capital founder Jason Ader filed the first legal volley, in a suit alleging that Okada Manila and its entities have breached their obligation to complete the merger promptly. The lawsuit also asked the court to order the deal to be consummated with all due speed.
Okada Manila’s operating companies filed counterclaims against the SPAC, putting the brakes on the merger, which would have seen the new company listed on the NASDAQ.
According to Inside Asian Gaming, in a legal response totaling more than 100 pages, the Okada operators, including Tiger Resort Asia Ltd. (TRA), Tiger Resort, Leisure and Entertainment, Inc. (TRLEI), UE Resorts International Inc. and Project Tiger Merger Sub. Inc. demanded that the deal be terminated, accusing Ader of fraud, breaking U.S. securities laws and breaching the terms of the merger agreement.
“The UEC Parties accordingly seek to remedy these breaches through declaratory relief that will permit the UEC Parties to part ways with this fundamentally untrustworthy and dishonest SPAC promoter,” the response stated.
The UEC Parties allege that Capital 26 and Ader have launched a “concerted and increasingly erratic campaign … to pursue closing at all costs in pursuit of a windfall.”
Specifically, they say Ader failed to tell investors about “material developments in the Philippines” after the former chairman of UEC, Kazuo Okada, forcibly took control of Okada Manila for three months in 2022. The takeover delayed completion of the merger.
The UEC Parties also say Ader traveled to Japan last year to plead his case with UEC directors, using privileged information gleaned from a “disloyal” UEC director, identified as Toji Takeuchi. They say Ader “gladly used” the insider info “to inform his negotiations.”
“This was not mere negligence by Ader,” UEC said. “As a former director and audit committee member at Las Vegas Sands, one of the world’s largest gaming companies, Ader was well aware of how wildly inappropriate it was to procure and exploit privileged and confidential information of his business counterparty in an effort to gain advantage in a negotiation. The UEC Parties’ investigation into Ader’s conduct in this respect is continuing.”
In a document quoted by GGRAsia, the UEC Parties claim that Ader “painted the SPAC as an innocent jilted buyer left at the altar by the Universal Entertainment parties’ alleged failure to close.”
26 Capital, meanwhile, has described the counterclaims as a “desperate litigation strategy.”
The case is being heard by a court in the U.S. state of Delaware.
