GGRAsia – Steve Wynn flags likely sale of some Wynn Resorts shares

Steve Wynn flags likely sale of some Wynn Resorts shares

Mar 22, 2018 Newsdesk Latest News, Macau, Top of the deck, World

Steve Wynn, founder and former chairman and chief executive of casino group Wynn Resorts Ltd, “intends to sell” some or all of his shares in the company, Wynn Resorts announced on Wednesday. An earlier filing dated March 14 had said merely that Mr Wynn “may” seek to do so.

Mr Wynn, who resigned last month amid allegations of sexual impropriety, is the largest shareholder in Wynn Resorts and could sell up to 12.13 million shares, the U.S.-based casino operator said in Wednesday’s securities filing.

“On March 20, 2018, Mr Wynn disclosed that he intends to sell all or a portion of the common stock controlled by him … in the open market … or in privately negotiated transactions,” said Wynn Resorts in Wednesday’s filing.

“If he [Mr Wynn] elects to sell any such common stock, he will seek to conduct such sales in an orderly fashion and in cooperation with the company,” stated the firm. “No assurance can be provided that Mr Wynn will elect to sell common stock, or the timing or terms of any such sale,” it added.

Under the separation agreement between Wynn Resorts and Mr Wynn, disclosed on February 16, the businessman may not sell during any quarter more than one-third of the company shares he controls on the open market “without the company’s prior written consent”. That restriction doesn’t apply to private sales, according to the company’s filing on Wednesday.

Shares of Wynn Resorts fell nearly 2.9 percent in Wednesday trading, to US$178.92. Based on that price, Mr Wynn’s 11.8 percent stake is worth about US$2.17 billion.

The potential sale of Mr Wynn shares follows years of courtroom battles with his ex-wife, Elaine Wynn, and former Japanese business partner Kazuo Okada. Over the past month, the company and Mr Wynn have worked to remove several obstacles that prevented him from selling his stock.

Earlier this month, Mr Wynn and his ex-wife agreed to declare as “invalid” a 2010 stockholders’ agreement involving them and Aruze USA Inc concerning control of each party’s respective shares of Wynn Resorts.

The stockholders’ agreement disallowed any of the subscribers – Mr Wynn, Ms Wynn and Wynn Resorts’ then biggest single shareholder, Aruze USA Inc, a firm at the time headed by Mr Okada – from selling their shares of Wynn Resorts without the consent of the other signatories.

The invalidation of the agreement means that Elaine Wynn can also sell her shares in the company. Ms Wynn controls a 9.26 percent stake in Wynn Resorts, owning approximately 9.54 million shares.

Wynn Resorts earlier this month announced it had agreed to pay a total of US$2.4 billion to settle the 2012 stock redemption dispute with Aruze USA and the latter’s parent company, Universal Entertainment Corp.

Additional scrutiny

Mr Wynn’s position as Wynn Resorts’ largest shareholder has left the company subject to additional scrutiny by gaming regulators in Nevada and Massachusetts, who are investigating the sexual misconduct claims made against Mr Wynn.

“The resulting controversy related to Mr Wynn and his separation from the company could significantly harm our business in numerous ways,” said Wynn Resorts in Wednesday’s filing.

“Gaming regulators in Massachusetts and Nevada are reviewing these matters, including suitability with respect to the company and its related licensees, and the company is cooperating with these regulatory reviews,” it stated. “The gaming regulator in Macau is monitoring and reviewing the situation, and the company is cooperating.”

Japanese brokerage Nomura said the sale of Mr Wynn’s shares in Wynn Resorts would further reduce potential risks for the company.

“Normally when Steve Wynn sells, investors should be selling, too. However, the circumstance is clearly different this time because Mr Wynn is no longer associated with the company, and he does not have a role in shaping its future direction,” said Nomura analysts Harry Curtis, Daniel Adam and Brian Dobson.

“As with most ‘retired’ individuals, he now joins the ranks of investors who need to diversify their portfolios and maximise their incomes,” they added.

Wynn Resorts is the parent company of Macau casino operator Wynn Macau Ltd.

Brokerage JP Morgan Securities (Asia Pacific) Ltd said in a Wednesday memo that it didn’t see “any fundamental implications” for Wynn Macau Ltd from the possible sale of Mr Wynn’s stake in Wynn Resorts.

“Mr Wynn had already stepped down as chairman/CEO last month, which we viewed as having limited operational impact; and he doesn’t hold any shares in Wynn Macau anyway,” said analyst DS Kim.

Wynn Resorts noted that each of the regulatory authorities – in Massachusetts, Nevada, and Macau – has the power to license and oversee the operations of the firm’s casino resorts.

These regulators “could take action against the company and its related licensees or Mr Wynn, including actions that could affect the ability or terms upon which our subsidiaries hold their gaming licenses and concessions, the suitability of the company to continue as a stockholder of those subsidiaries, and/or the suitability of Mr Wynn to continue as a stockholder of the company,” the firm added.

The company said additionally that the investigations and litigation could also have a negative impact on the company’s ability to bid successfully for new gaming market opportunities. Wynn Resorts has declared itself a contender for a possible casino licence in Japan.

On Tuesday, Wynn Resorts announced that it received the consent to amend an agreement with some of the company’s bondholders.

Under the previous terms of one set of notes, the company could have been forced to offer to buy back all of the bonds issued by some of its subsidiaries if any investor were to gain a larger share in the company than Mr Wynn and Ms Wynn combined.

The casino operator said on Tuesday that approximately 96 percent of the holders of the notes had agreed to rewrite that provision, with the company paying an aggregate of US$25 million.