Universal Entertainment Corp. has approved financing, licensing and support arrangements for UDN Gaming Inc., a Nevada company that will lead the initial phase of the Japanese group’s planned return to the overseas gaming equipment market while Universal pursues its own U.S. gaming licenses.
Under agreements scheduled for September 30, Universal subsidiary Aruze USA Inc. will provide UDN with a credit facility of up to $25 million at an annual interest rate of 5.12 percent, running through December 31, 2035. UDN will draw the funds in stages according to its financing needs.
All UDN shares held by Universal President Tomohiro Okada will serve as collateral. Aruze USA can also require Okada to transfer the shares to Universal or a designated third party at their original subscription price. Universal will license gaming equipment intellectual property to UDN for $100 per unit shipped and provide engineering, accounting and administrative support at direct cost plus 6 percent.
UDN was established in Nevada on March 13 with capital of $1 and is wholly owned by Okada, who is also one of its directors. Okada is Universal’s representative director and president and the controlling shareholder of its privately held parent, Okada Holdings Ltd. UDN was formed “for the purpose of promoting the business of development, manufacture, and sale of gaming equipment including slot machines overseas”.
Universal currently holds no voting rights in UDN but said the company would become a consolidated subsidiary under applicable accounting standards because Universal will provide all of its financing and core gaming equipment intellectual property. The timing of consolidation has not been determined.
Universal or a designated third party may later acquire all UDN shares, depending on the progress and outcome of Universal’s own U.S. gaming license applications.
The group said it would use UDN initially because U.S. gaming licensing reviews, particularly in Nevada, are among the world’s “most stringent”. A direct application by Universal would require suitability reviews of major shareholders, directors, key employees and other relevant parties and could take a “considerable” amount of time.
“During the business launch phase, Universal Entertainment has decided to first use UDN… to apply for gaming licences and to advance the business in stages, while Universal Entertainment also intends to apply for licences in due course,” stated the filing.
Universal said the overseas gaming equipment business is intended to become a “third pillar” alongside its domestic amusement equipment operations and integrated resort business centered on Okada Manila. The company cited a “downward trend” in Japan’s amusement equipment market and “intensifying competition” in the Philippine integrated resort sector.
“There is a need to promptly secure a new revenue base in the form of a new business,” the Japanese conglomerate stated.
Universal previously had links to overseas gaming equipment through Aruze Gaming America Inc., founded by Kazuo Okada. The company supplied slot machines and electronic table games but was not a Universal subsidiary. Their relationship later deteriorated, with Universal pursuing legal action over alleged unauthorized use of gaming-machine patents.
Aruze Gaming America filed for Chapter 11 bankruptcy protection in 2023, after which Play Synergy acquired its slot-machine assets and Interblock acquired certain electronic table-game assets.
Because UDN is wholly owned by Tomohiro Okada, the agreements are related-party transactions. Okada did not participate in the board deliberations or vote. The remaining eight directors “unanimously approved” the transactions, while the Audit and Supervisory Committee also approved them.
