Industry investment veteran, Jason Ader of 26 Capital Acquisition Corp., recently expressed confidence that Japan’s Universal Entertainment Corp., will be back in control of Okada Manila soon.
The parties had agreed in principle for Ader’s special purpose acquisition company (SPAC) or “blank-check company” to take the $3.3 billion Philippines casino resort public on the NASDAQ in America through a merger of the two entities.
Control of the asset was thrown into confusion with a physical takeover of the boardroom and physically ejecting board members out the door on May 31, 2022. Those actions, which included the participation of private security agents and about 50 local police officers in the siege came as a surprise to most but might have been predicted based on an April court ruling.
The Philippine Supreme Court handed down a ruling in April stating that founder and former head, Kazuo Okada should be reinstated as the chairman of the casino’s parent company.
Chairman Ousted in 2017
Okada had been ousted from the company in 2017 after accusations of misappropriation of funds. Okada has denied all such accusations.
While some type of move by Okada might have been expected, there were no prerequisite administrative or judicial permits or orders authorizing the takeover.
Especially troubling according to the operating company is that the concern in control of over 99% of voting rights was not even a Philippine company and in their view not subject to the order from the Supreme Court. They also claim the Supreme Court decision was a provisional order and that the Court was still considering the restoration of Mr. Okada’s position.
The unprecedented “hostile takeover” of the premises led to the publication of a Notice Regarding Extension of Agreement Deadline for Subsidiary’s Merger (De-SPAC).
If the merger/acquisition were to proceed, Okada Manila would be able to access an untold number of different types of funds and increase investment in the company.
Okada Manila sits on over 100 acres of land and is one of only four casino resorts in Manila’s Entertainment City. The casino has about 3,000 slot machines and 500 gaming tables.
Slow but Stable Revenue Recovery
While the Philippines casino sector continues to rebound, it is a slow recovery with gross gaming revenues only up about 14% in 2021 to a level roughly half of the amount generated in 2019 before the pandemic.
While the US gambling economy has more than recovered from the health emergency shut-downs, Asian gaming has not been as robust. Macau, a special administrative district of China has had sporadic returns but travel restrictions have kept it from returning to anywhere near the levels of previous years. Experts only expect 2022 gross gaming revenues to reach 27% of their pre-pandemic levels.
Source: Nasdaq-listed 26 Capital to pursue $2.5 bln SPAC deal with Manila casino, Reuters, June 15, 2022