Japanese gaming conglomerate Universal Entertainment said in a Friday filing to Jasdaq that it “strongly believes” it will be able to present via a U.S. court a case against casino operator Wynn Resorts Ltd seeking return of 24.55 million shares in the latter that Universal Entertainment says are owed to its own unit Aruze USA Inc.
Universal Entertainment indicated in its Friday filing that at the Nevada trial, scheduled to start on April 16 next year, it would argue the Wynn Resorts shares were “unfairly and improperly redeemed by Wynn Resorts” and that the Japanese group would seek damages from Wynn Resorts “well in excess of a billion [U.S.] dollars for undervaluing the redeemed shares by more than 30 percent of the then market price of the shares, even if the redemption was valid”.
It emerged last week that a Nevada state court, had rejected a bid by Wynn Resorts Ltd, parent of Macau casino firm Wynn Macau Ltd, to avoid a jury trial regarding the previous role of Japanese entrepreneur Kazuo Okada – founder of Universal Entertainment – as a Wynn Resorts shareholder.
In 2012, Wynn Resorts’ board voted to cancel a 20 percent stake in the firm amounting to 24.5 million shares and held by Mr Okada through Universal Entertainment. Wynn Resorts issued him with a promissory note for US$1.9 billion. The note was in effect a 30-percent discount on the then US$2.77-billion valuation of his stake.
The decision followed a Wynn Resorts-commissioned report that concluded Mr Okada was “unsuitable” to be a company director and a threat to the firm’s gaming licences. This was on the basis of Mr Okada allegedly providing gifts to what were then senior officials of the Philippine casino regulator, the Philippine Amusement and Gaming Corp.
Mr Okada and Universal Entertainment have denied any wrongdoing, and the firm subsequently won the right to develop its own gaming resort – Okada Manila – in that country.
Since then, Mr Okada has been ousted from the board of Universal Entertainment following an unrelated company-initiated enquiry that found he was responsible for “three acts of fraudulence”.
The wrangle between Mr Okada and Universal Entertainment also includes the issue of who has the right to control Aruze USA, and by extension, might also have an impact on the ultimate beneficiary of any Wynn Resorts shares that might be returned to the Japanese parties were there to be success in the Nevada court trial.
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“We expect Las Vegas Sands to not have any material change in strategy. The focus remains developing Macau and Singapore”
Vitaly Umansky, Kelsey Zhu and Tianjiao Yu
Analysts at brokerage Sanford C. Bernstein