In a significant turn of events, 26 Capital Acquisition Corp, a special purpose acquisition company (SPAC) listed on the Nasdaq stock market in the United States, has announced its decision to undergo “liquidation.” This decision comes in the wake of an adverse court ruling concerning a proposed merger deal with the operator of the Okada Manila casino resort, situated in the heart of the Philippine capital, which had plans for the merged entity to be listed on Nasdaq.
On September 7, a U.S. court in Delaware delivered a ruling that exempted Okada Manila’s parent company, the Japanese conglomerate Universal Entertainment Corp, from fulfilling the merger agreement.
As a result of this court ruling, 26 Capital issued a press release stating that it would be unable to complete the planned “business combination” with Universal Entertainment within the agreed-upon timeframe due to the legal setback.
26 Capital further revealed its intention to initiate the liquidation of a trust account associated with the merger deal, effective as of September 21. Additionally, the company expressed its expectation that the Nasdaq stock exchange operator would collaborate with the U.S. Securities and Exchange Commission (SEC) to delist 26 Capital’s securities.
In the same press release, 26 Capital affirmed its commitment to aggressively pursuing all available legal remedies against Universal Entertainment, including seeking damages.
The court ruling acknowledged 26 Capital’s entitlement to seek damages and outlined the conditions under which the SPAC could potentially recover damages. It stated that if 26 Capital can prove a breach of the agreement, if the defendants fail to establish their affirmative defenses, and if 26 Capital adequately substantiates causally related damages, then it may have a legal basis to recover damages.
The dispute traces back to February when 26 Capital initiated legal action against Tiger Resort, Leisure and Entertainment Inc, the promoter of Okada Manila, and other subsidiaries of Universal Entertainment, urging the prompt consummation of the previously announced merger between the two entities.
In July of the same year, Universal Entertainment declared its decision to terminate the deal as of June 30, citing “various material breaches of the merger agreement” by 26 Capital and alleging “fraudulent conduct” on the part of 26 Capital. The latter firm vehemently contested these allegations, asserting they were without merit.
At the outset of the merger deal announcement in October 2021, it implied an enterprise value of US$2.6 billion for Okada Manila. As the legal battle unfolds, the future course of action for both 26 Capital and Universal Entertainment remains uncertain.
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