In an unexpected turn of events, a key investor in the special purpose acquisition company (SPAC) 26 Capital is pursuing legal action to remove Jason Ader, the SPAC’s principal. This development comes in the wake of the collapsed merger deal between 26 Capital and Okada Manila, an integrated resort in the Philippines.
Failed Merger and Legal Disputes:
The merger between 26 Capital and Okada Manila was initially slated for completion in November 2022, with the aim of enhancing the prospects of the Philippines-based casino company on the US stock exchange. However, the merger encountered numerous delays, leading Jason Ader to file a lawsuit against Okada Manila entities in February. Ader alleged that the entities had breached their obligations under the merger agreement and sought a court order to compel the merger’s completion.
In response, Okada Manila terminated the merger agreement in June 2023, citing “various material breaches of the merger agreement and fraudulent conduct by 26 Capital.” The legal battle continued, ultimately resulting in a Delaware Court ruling in September. The judge concluded that there was no obligation for the merger to proceed. Notably, the court revealed that 26 Capital’s main advisor for the merger, Alex Eiseman, founder of the Zama Capital hedge fund, owned more than 60% of a 26 Capital affiliate.
Ongoing Legal Complications:
The aftermath of the failed merger has led to additional legal challenges. A law firm, Schulte Roth & Zabel, filed a $2 million claim against 26 Capital in September for work related to the merger, which occurred prior to its collapse. This claim triggered a temporary restraining order, preventing 26 Capital from dissolving until a hearing is held.
Investor Seeks Removal of Jason Ader:
In light of these legal disputes and the unsuccessful merger with Okada Manila, Zama Capital Master Fund, a significant investor, is seeking a court order to remove Jason Ader from his position as the managing member of 26 Capital Holdings, the entity responsible for overseeing the merger.
The fallout from the failed merger between 26 Capital and Okada Manila has led to a series of legal complications, with one investor now pursuing Ader’s removal. This situation highlights the complex nature of mergers and the legal challenges that can ensue when such deals falter. The future direction of 26 Capital and its involvement in the gaming industry remains uncertain as legal proceedings continue.