Officials of a Japanese entertainment company in a merger fight over a Manila casino resort sought to improperly influence a prominent Filipino legislator to regain control of the property, a special purpose acquisition company suing Universal Entertainment Corp. alleged.
(Bloomberg) — Officials of a Japanese entertainment company in a merger fight over a Manila casino resort sought to improperly influence a prominent Filipino legislator to regain control of the property, a special purpose acquisition company suing Universal Entertainment Corp. alleged.
In a filing Monday in Delaware Chancery Court, the SPAC, 26 Capital Acquisition Corp., claimed that Universal executives brought “heavy luggage” to a meeting with Philippine House of Representatives Speaker Martin Romualdez to try to secure his support in the dispute. They have been trying to take back control of the 100-acre (40-hectare) Okada Manila resort and casino, valued at $2.6 billion.
The filing includes emails that 26 Capital says show the executives flew from Japan to meet with Romualdez to enlist his help in pressuring the nation’s Supreme Court to advance their interests. The SPAC’s lawyers claim that Universal’s wrongdoing includes “potential bribery of governmental officials followed by efforts to run the deal clock out before such activity comes to light.”
Brad Davey, a Wilmington-based lawyer for Universal’s Tiger Resort unit, didn’t return a call seeking comment on the allegations. Romualdez didn’t respond to an email sent after the close of business in Manila.
SPAC Craze
SPACs are shells designed to buy another company with the investment money they attract and take it public. They quickly evolved from an obscure corner of the financial world to an investing craze before coming under more government scrutiny.
Jason Ader, CEO of SpringOwl Asset Management LLC, launched 26 Capital to combine it with the resort and secure a listing for the property. The deal fell apart, and the SPAC sued Universal to revive it. Ader, a veteran gaming industry analyst who sits on the board of Las Vegas Sands Corp., testified earlier this month that Universal started working to sabotage the transaction starting in 2022. Universal declared the merger dead on June 30.
Read More: Universal Entertainment Executives Blamed for Failed SPAC Merger
The dispute involves a $275 million investment by 26 Capital in the resort and casino. Universal owns 88% of the property under the terms of the deal. But the transaction has been complicated by turmoil within the Japanese company. Universal and its units managing the casino have been at odds after its founder, billionaire Kazuo Okada, was ousted from the board last year.
Okada took control of the property after the Philippine Supreme Court reinstated the billionaire as chairman of the casino’s operator, Tiger Resort Asia, a Universal unit. That prompted Universal executives to come up with a plan to regain control of the casino, the SPAC alleges. According to the filing, the emails show that a Universal executive flew from Tokyo to the Philippines a year ago, bringing the “heavy luggage” with him. He and a second Universal official met with Romualdez, 26 Capital claims.
‘Top-Secret’ Mission
Romualdez then called justices of the country’s Supreme Court to urge them to allow the Tiger Resort unit to take back the resort, the filing says. In September, in clarifying its earlier decision, the court effectively did so. The SPAC’s officials were “never told about the July 2022 top-secret heavy-luggage mission,” Ader’s lawyers said in the filing.
Ader has said his struggles to get Universal executives to close the SPAC deal — which his lawyers have described in US football terms as being so close to done that it’s “on the one-yard-line” — show they had abandoned vows under the agreement to use “reasonable best efforts” to finalize the transaction. The resort’s managers counter that a spate of problems with SPACs in the US soured them on the merger and gave them legitimate reasons to pull out.
The case is being heard in Delaware because that’s where 26 Capital is incorporated. The state is the corporate home to more than 60% of Fortune 500 companies. Its Chancery judges are known for their speedy handling of M&A fights without juries.
The case is 26 Capital v. Tiger Resort Asia, 2023-0128, Delaware Chancery Court (Wilmington).
Read More: Manila Casino Fight Over SPAC Deal Fast-Tracked in Delaware
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