Universal Entertainment Corporation (UEC), based in Tokyo, has established a new overseas business entity in Nevada focusing on gaming manufacturing and distribution, targeting the US market.
On Friday (Sept. 11), the UEC Board approved an agreement with UDN Gaming, Inc. (UDN), a new entity formed by UEC for manufacturing and selling gaming equipment, including slot machines, internationally.
UDN has been authorized up to a $25 million loan at 5.12% interest until 2035, with shares of the company serving as collateral.
Tomohiro Okada, president of UEC, is the sole owner of UDN. The company will benefit UEC through loan interest and ongoing fees for intellectual property and support services.
Under the agreement, UDN will utilize Universal’s intellectual property and pay $100 per gaming unit sold to UEC indefinitely. UDN will also pay for engineering, accounting, and administration support services with a 6% markup.
UDN will eventually be merged with Universal once operational. The separate entity formation streamlines the gaming licensing process in Nevada, which is known for stringent reviews that could prolong acceptance.
In the United States, gaming license reviews are among the most stringent, particularly in Nevada. If UEC were to apply directly, significant time would be needed to review major shareholders, directors, key employees, and other relevant persons,” stated a release from Universal Entertainment.
“Currently, UEC does not hold any voting rights in UDN. Tomohiro Okada, UEC’s representative director and president, holds all voting rights in UDN,” the statement added.
Universal Entertainment has faced controversy, including the ousting of Kazuo Okada over alleged theft from the company and a failed attempt to list Okada Manila on the Nasdaq through a merger with SpringOwl Asset Management.
Diversification of Revenue
Due to operational challenges within its existing businesses, UEC is seeking new revenue streams for sustainable growth.
“With changes in the business environment, including decreased domestic amusement equipment market and heightened competition in the Integrated Resort (IR) Business in the Philippines, UEC realizes the importance of establishing a new revenue base promptly,” the company noted.