The Delaware judge ruled on September 7, 2023 that Okada Manila, the largest casino in the Philippines, is not obliged to complete a special purpose acquisition company (SPAC) merger agreement with the US-based 26 Capital Acquisition Corp owned by Jason Ader, as Reuters reports.
Okada Manila Doesn’t Have to Complete The Deal
Vice Chancellor Travis Laster reportedly said that Okada Manila‘s owner Japan’s Universal Entertainment Corp was not obliged to complete the 2021 merger deal of its affiliate Okada Manila with 26 Capital as the latter “engaged in conduct that should not be rewarded” by requesting the deal closure. As reported, Laster has left the option for 26 Capital to seek damages to be considered at a later time.
Breech Allegations Against Okada Manila Entities
Merger cases brought before Delaware courts have often been ruled to have the merger deals completed by the parties. Jason Ader filed a lawsuit against Okada Manila’s entities Tiger Resort Asia Ltd, Tiger Resort, Leisure and Entertainment Ltd, UE Resorts International Inc, and Project Tiger Merger Sub Inc in the Delaware Court of Chancery in February 2023 for the alleged breach of contractual obligations under the merger deal.
Okada Manila Terminated The Deal
The Okada Manila entities reportedly terminated the merger agreement on 30 June 2023. As reported by IAG, the Okada Manila entities stated that the termination was the consequence of “various material breaches of the merger agreement and fraudulent conduct by 26 Capital … that were discovered in the litigation process.”
Opposite Ruling Might Violate Philippine Supreme Court Order
The Delaware court reportedly explained that the order to close the deal could violate the April 2022 Philippine Supreme Court order that Kazuo Okada, the founder of Universal Entertainment Corp, return to the position of the Okada Manila’s CEO. IAG considers the Philippine Supreme Court order controversial, but Vice Chancellor Laster said that the ruling to have the deal closed would reward improper conduct, as reported by Reuters.
$275-million-Worth ”Conspiracy to Mislead Universal”
Vice Chancellor reportedly explained that the Okada Manila entity owners have never been informed that their deal advisor Alex Eisman, the founder of Zama Capital hedge fund, had more than 60 percent ownership in one of the 26 Capital’s affiliates. As reported, Laster explained that Eisman would have interest to arrange a casino deal as it would be beneficial for his investment activities. Vice Chancellor referred to the deal as a ”low ball deal” and considered that Eisman’s collaboration with 26 Capital represented “a conspiracy to mislead Universal,” according to Reuters.
None of the 26 Capital or Okada Manila’s representatives commented the verdict on the merger deal case for the Okada Manila casino.Had the deal been closed, it would reportedly generate $275 million for the multi-billion-dollar casino resort operating in the Philippine capital since 2016.