Posted on: May 18, 2022, 05:39h.
Last updated on: May 18, 2022, 11:04h.
The Philippine Supreme Court recently ordered Tiger Resort, Leisure and Entertainment Inc (TRLEI) to reinstate its former chairman and CEO, Kazuo Okada. The casino operator was never going to abide by the order willingly and is confident it will successfully beat the ruling.
TRLEI removed Okada five years ago over allegations he misused company funds for his own benefit. However, the Philippine Court of Appeals rejected the allegations last December. The longtime gaming industry fixture then increased his legal fight to return to the company.
Okada, a long-time friend of Steve Wynn, won that fight a week ago, but no one expected TRLEI to accept the outcome. It announced almost immediately after the court ruling that it would contest the decision. It added yesterday that it has a “strong legal basis” to reverse the court’s stance.
Battle Far From Over
TRLEI continues to assert that its decision to remove Okada was “valid and legal,” and was the result of guidance it received from Tiger Resort Asia Ltd. That entity is the direct parent company of TRLEI, and part of the Universal Entertainment Corp. umbrella, which Okada founded.
Tiger Resort, as almost the exclusive shareholder of TRLEI, put its full weight behind the decision to oust Okada. The company holds 99.99% of TRLEI’s shares, essentially giving it autonomous control to direct the latter’s business.
The status quo order is very unclear and vague as to how it can possibly be implemented, especially considering that in the past five years, many things have happened in TRLEI that obviously cannot simply be undone or disregarded,” stated TRLEI on Tuesday.
In addition to the confusing status quo order, TRLEI believes it has another legal out. It asserts that it doesn’t have to abide by orders it receives from a court in the Philippines. This is because it is a Hong Kong-based company.
Another wrinkle over the legality of the order stems from the fact that TRLEI falls under the Universal umbrella. As such, since Universal is a Japanese publicly-listed company, there is another layer of protection. Several courts in Japan already upheld Okada’s ouster.
Okada Running Out of Legal Avenues
Virtually all of the avenues Okada chooses lead to a dead end. TRLEI’s Urgent Motion for Reconsideration wants to block the status quo order the court handed down. That request is now in the hands of the Philippine Supreme Court,
In the Philippines, both the Regional Trial Court and the Court of Appeals confirmed the validity and legality of his removal. The Philippine Supreme Court’s issuance of a status quo ante order, a temporary measure, does not change the ownership structure of TRLEI, nor will it impact our operations,” said TRLEI in a statement.
Essentially the only link Okada now shares with the Philippines is Okada Manila, the casino that bears his name. However, even it supports Okada’s removal from the company.
Universal seems to be doing just fine without Okada at the helm. This past Sunday, it provided its latest financial health report, and things are going well. It reported a net income of JPY8.36 trillion (US$64.7 million) for the first quarter of the year. This is a significant turnaround from the loss of JPY5.21 billion (US$40.3 million) during the same period in the last fiscal year.
This improvement was mainly due to Universal’s pachinko and pachislot machine segment. In spite of a drop in popularity in Japan, Universal’s net sales from the activity increased more than three times year on year. The segment accounted for JPY16.24 trillion (US$125.7 million).
Okada Manila showed signs of recovery as well. The casino reported a loss of JPY498 million (US$3.9 million) in operating profits for the period. However, its net sales of JPY11.29 trillion (US$87.4 million) during the quarter were 26.2% more than a year earlier. At the same time, Adjusted Segment EBITA (earnings before interest, taxes and amortization) of JPY2.43 trillion (US$18.8 million) was up 68.8%.