US firm in $2.6B merger talks with Okada Manila

Read this in The Manila Times digital edition.

A $2.6 BILLION merger is in the works between a Philippine casino hotel and a US firm which, if closed, could result in the listing of the largest Filipino company on the Nasdaq stock exchange.

Negotiations have been set between UE Resorts International Inc., the holding company behind Okada Manila, and 26 Capital Acquisition Corp., a US special purpose acquisition firm, after the Philippine Amusement and Gaming Corp. (Pagcor) returned control of the integrated casino hotel to Tiger Resort Asia Ltd. (TRAL), a UE subsidiary.

“This is creating the largest Philippine listed company in the US. Our deal will even be bigger than when the Philippine Long Distance Company traded in the US. Our deal will be even bigger than that,” Jason Ader, chairman and CEO of 26 Capital Acquisition Corp., told The Manila Times in an exclusive virtual interview from New York City on Friday night.

Listed on Nasdaq a year and a half ago, 26 Capital’s mission and goal was to merge with gaming companies.

Ader said 26 Capital searched many gaming companies worldwide and ultimately concluded that a partnership with UE and the Okada Manila property was “the best opportunity.”

“I think the Filipino market for gaming, hospitality and leisure is an incredible opportunity. I think it is really one of the most exciting and best gaming markets in the world,” said Ader, who is also the co-founder and CEO of SpringOwl Asset Management LLC.

“I had long experience, many years, with the Las Vegas Sands Corp., and I got to know the Macau and Singapore markets very well in those years, and I think that to a large extent the American investors really have no idea what the potential is for the Philippines. I really want to bring to the Nasdaq, bring to the US market the opportunity to invest in the rapidly growing and exciting Philippine gaming market, which I consider to be the best gaming asset which is the Okada Manila and so I felt it was worth the wait, and I still believe that to be the case,” he said.

According to Ader, the Nasdaq listing is “an extraordinary opportunity” for Okada Manila because it will allow American investors to provide capital to the five-star facility, thereby helping it grow and develop.

He said it would take at least several weeks before the merger could be completed and announced.

“Obviously we had a delay and we were just back in the building, and it’s only been a week and so we are looking forward to going through the financial results, going through the accounting procedures required for us to redo given the delay. Once we do that, we plan to make the announcement when we put out our quarterly results next month,” Ader said.

The Supreme Court issued a status quo ante order (SQAO) last April 27, 2022, which temporarily restored Japanese gaming tycoon Kazuo Okada as a stockholder, director, chairman and CEO of Tiger Resort Leisure and Entertainment Inc. (TRLEI), operator of Okada Manila. These were the positions that Kazuo held prior to his ouster in 2017 on allegations of fund mismanagement.

Armed with the SQAO, the Kazuo camp took over the management of Okada Manila on May 31, and a new set of officers, led by Filipino businessman Antonio “Tonyboy” Cojuangco and Dindo Espeleta, were immediately appointed to the TRLEI board.

Earlier this month, however, TRAL successfully reinstated its board members in TRLEI and fully regained control of the integrated resort and casino after Pagcor issued a cease and desist in relation to its management and operation. The government-run gaming regulator ordered Cojuangco and his group to vacate the board in accordance with the opinion issued by the Department of Justice dated September 1 which confirmed Pagcor’s power and authority to act on the appeal of TRAL, which owns 99.9 percent of TRLEI, to retake control of the casino-hotel’s board.

Last week, the Court of Appeals denied the urgent motion of the Kazuo camp for a temporary restraining order (TRO) to stop Pagcor from implementing its September 2 order.

Ader expressed optimism that the Okada Manila issue will soon be resolved with finality by the Supreme Court.

“I have great confidence in the legal system, I understood the case very well and I think there were some misrepresentations by Kazuo Okada with respect to the status quo ante order, I have great confidence in Universal and as a partner, I continue to be very comfortable that this will be resolved very favorably for the gaming industry and for the employees that work at the property,” said Ader.

He expressed his firm belief that the new government in the Philippines under President Ferdinand Marcos Jr. “very much wants to see this transaction go forward.”

“They (Marcos government) would like to see Okada Manila be listed on Nasdaq and having a very large Philippine listed company in the US showcasing maybe the best assets in the Philippines,” said Ader.

“My sense is that Pagcor wants to improve its reputation in the US as [the] premier gaming regulator that has the integrity that we see in the US like in Nevada and New Jersey,” he added.

Ader further expressed his belief that the merger between 26 Capital and UE will be great for the Philippines “reputationally” as this will change forever in a positive way how investors look at opportunities in the Philippines.

“I think this will go very well. I think once we list I think the stock price has the potential to improve significantly over time, and if this transaction is successful and I think when American investors see the quality of the industry, the hospitality, gaming and leisure industry and the quality of the asset, there will be much more investor interest in the US to invest in the Philippines. So this is a critically important transaction to open up the capital market for future deals,” Ader said.

“I cannot be more excited. My goal is to really close our merger as quick as possible so I can work with the team. I am building significant shareholder value,” he added.