Wynn Macau Ltd is nearly doubling the 2014 annual cap on billing of design services from a related firm during the company’s preparation of the US$4 billion Wynn Palace property on Cotai.
The Macau-based gaming operator on Wednesday told the Hong Kong Stock Exchange about the change. It did so because the arrangement with Wynn Design and Development LLC is regarded as a connected transaction under bourse rules as the firm is a subsidiary of Wynn Resorts Ltd, the parent company of Wynn Macau.
Wynn Macau said the annual cap for 2014 – originally set three years ago – would rise by 98 percent, from HKD78.8 million (US$10.2 million) to HKD156 million.
The statement said: “…the directors have determined that the original 2014 annual cap is insufficient due to… an increase in the level of design services required by the group in connection with Wynn Palace compared to the amount initially projected when the original 2014 annual cap was first set in 2011” and “the substancial enhancement and renovation works at Wynn Macau [casino hotel]“.
Wynn Macau’s chairman Steve Wynn (pictured) nonetheless said on a July 2013 conference call with analysts that the project cost of Wynn Palace – due to open in the first half of 2016 – is capped at US$4 billion “all in”.
Wynn Design and Development provides the group with design services in connection with the company’s projects in Macau, including the “development, design and construction oversight” of Wynn Palace and enhancement and renovation works at Wynn Macau added the filing.
The casino at Wynn Macau is undergoing a US$60-million redevelopment due to be finished before the next Chinese New Year holiday in February 2015.
The Wynn Design and Development team includes award-winning interior designer Roger Thomas. Mr Thomas has worked with Steve Wynn since the 1980s on several projects in Las Vegas.
The current three-year agreement with Wynn Design and Development and the Wynn Resorts group is due to expire on December 31.
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China