Universal Entertainment Plots Overseas Slot Return Via Okada-Owned Nevada Firm
Japan's Universal Entertainment Corporation is staging a return to the overseas slot machine market through UDN Gaming, a Nevada company wholly owned by its president and executive director, Tomohiro Okada, according to a September 11 regulatory filing.
UDN Gaming was incorporated in Nevada on March 13 with just $1 in capital and will initially apply for the gaming-equipment licenses needed to develop, manufacture and sell slot machines in the US, before Universal itself applies for its own American gaming licenses in due course.
The structure lets the business launch sooner than a direct application would allow, since Universal says a licence review covering its major shareholders, directors and key employees could take considerable time.
Under agreements due to be executed on September 30, Universal subsidiary Aruze USA will extend UDN a credit facility of up to $25 million, carrying a 5.12% annual interest rate and running until December 31, 2035, with Okada's UDN shares pledged as collateral and a provision allowing Aruze USA to require their eventual transfer to Universal.
Third Pillar Alongside Okada Manila
Universal says it wants the overseas gaming-equipment business to become a 'third pillar' alongside its domestic amusement-equipment operations and its integrated-resort business centred on Okada Manila, citing a declining domestic amusement market and intensifying competition among Philippine integrated resorts as reasons to build another revenue base.
Universal will license its gaming-equipment intellectual property to UDN for $100 per unit shipped and will charge for engineering, accounting and administrative support at direct cost plus a 6% markup.
Universal currently holds no voting rights in UDN but says the entity will still be treated as a consolidated subsidiary under applicable accounting standards due to the financing and support it provides.
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A Cautious Re-Entry
Universal previously scaled back its international slot ambitions after a lengthy legal battle between the company and a former Nevada subsidiary, Aruze Gaming America, that played out in US federal court over ownership and licensing disputes tied to the Universal Distributing of Nevada name, UDN Gaming now revives.
Building the new venture around a president-owned entity, rather than a direct Universal subsidiary, lets the company test the US market again without immediately triggering the full suitability review Nevada, and other states require of a listed parent company's own gaming license.
