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Philippines – UEC Parties wants to abort Okada Manila merger with Capital 26

By Phil - 20 March 2023

UEC Parties, made up of Okada Manila owner Tiger Resort Asia and UE Resorts International, are calling for a merger agreement with US-based 26 Capital Acquisition Corp. to be ripped up due to the latter’s ‘material breaches and fraudulent misconduct.’

The deal would have seen the Philippines casino to list on the NASDAQ in the United States.

Presented to the Delaware Court of Chancery, the counter claims follow a suit filed by Capital 26 claiming that the Okada Manila entities had failed to merge promptly. Filed in February that suit stated: “26 Capital Acquisition Corp. filed a complaint in the Delaware Court of Chancery seeking a grant of specific performance ordering the UEC Parties to specifically perform their obligations under that certain Agreement and Plan of Merger and Share Acquisition Agreement, by and among the UEC Parties and 26 Capital, dated as of October 15, 2021, as amended,” according to a Form 8-K filing made by the blank-check company with the Securities and Exchange Commission.”

In response the UEC Parties said: “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. Capital 26 and Ader have embarked on a concerted and increasingly erratic campaign to pursue closing at all costs in pursuit of a windfall.”

It claims that Capital 26, led by David Ader, failed to disclose to his investors of ‘material developments in the Philippines’ reffering to former chairman of UEC, Kazuo Okada, forcing control of Okada Manila for three months in mid-2022.

“This was not mere negligence by Ader,” the claims states. “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.”

“These and other false statements, including explicit threats of personal liability, convinced the Parent Company’s decision-makers to agree to a one-year extension of the termination rights in the Merger Agreement,” it added. “All of this conduct breached three clear contractual obligations – confidentiality, no public statements without written preapproval, and no violation of law, such as US securities laws.

“The conduct at issue also involved outright deception in Ader’s negotiations with the Parent and his use of information from the Disloyal Director, all of which was intended to enrich himself. The UEC Parties accordingly seek declaratory, monetary, and other relief.”