March 8, 2018 - 4:08 pm
Wynn Resorts said Thursday it has agreed to pay Universal Entertainment $2.4 billion to end a rancorous six-year battle over a 20 percent stake in the Las Vegas-based casino operator.
Wynn Resorts redeemed Universal’s stake in 2012 amid corruption charges against the Japanese company’s founder Kazuo Okada, a Wynn board member.
The company issued Universal a $1.94 billion promissory note due in 2022 paying 2 percent annual interest. The note was a 30 percent discount to the $2.77 billion market value of the Wynn Resorts stake.
Universal sued Wynn to recover its stake and for a higher interest rate.
As part of the agreed-upon settlement, Wynn Resorts will pay Universal the $1.94 billion principal on its redemption note as well as $463 million to settle allegations over the interest rate. Universal’s effective interest rate on the note comes to about 6 percent.
Both payments will be made on March 31.
As part of the deal, Universal’s U.S. unit, Aruze, has agreed not to consider itself a party to the amended shareholder agreement with Steve Wynn and his ex-wife Elaine Wynn signed in 2010. The shareholder agreement stated at if any members of the agreement wanted to sell their shares, they needed permission from the other two.
The agreement now opens the door for Wynn to again seek to annul the shareholder agreement and sell some or all of his share. Elaine Wynn could do the same thing. A Nevada court last week denied Steve Wynn’s motion to annul the agreement with his wife on the grounds that Aruze was still party to the agreement.
A representative for Steve Wynn said Wynn declined to comment on Thursday’s decision. A representative for Elaine Wynn said she declined as well.
A representative for Okada could not be reached. However, even last year the Japanese businessman expressed fear the company he founded would settle with Wynn Resorts. Okada was pushed out of the Universal board last year, improving the chances of a settlement.
“This is what scares me most,” Okada told Reuters in an interview last July. “It’s natural for (the Universal board) to think that getting the money is the smart thing to do.”
The settlement comes just a month after Matt Maddox took the reins of the casino operator following Steve Wynn’s departure amid claims he sexually harassed female employees.
The resolution enables Maddox to focus more on the company’s operations and expansion plans.
Wynn Resorts is building a $2.4 billion casino in Massachusetts that is expected to open in June 2019. It also plans to expand in Cotai and build a convention center, hotel and lagoon on its Strip property in Las Vegas.
“Management noted that that it is excited to put this overhang behind it,” JPMorgan analysts said in a note Thursday after meeting Maddox and other managers.
Maddox told investors Wednesday the company is “revisiting” its Las Vegas investment plans.
Wynn Resorts will make Macau investments a greater priority over Las Vegas, JPMorgan cited management as saying Thursday.