GGRAsia – Universal says Steve, Elaine Wynn still bound by 2010 pact

Universal says Steve, Elaine Wynn still bound by 2010 pact

Feb 20, 2018 Newsdesk Latest News, Top of the deck, World

Japanese gaming conglomerate Universal Entertainment Corp said in a Friday filing to Jasdaq that the group has “numerous pending claims” regarding a stockholders’ agreement related to shares in U.S.-based casino operator Wynn Resorts Ltd.

The stockholders’ agreement – signed in 2010 – prevented Wynn Resorts founder Steve Wynn, his ex-wife Elaine Wynn, and Japanese businessman Kazuo Okada from selling their respective shares in the firm without the consent of the other two shareholders.

In 2012, Wynn Resorts forcibly ordered the redemption at a discount of the company shares controlled by Mr Okada, the company’s then biggest single shareholder. Mr Okada’s shares in Wynn Resorts were held via Aruze USA Inc, a subsidiary of Universal Entertainment.

On February 9, Wynn Resorts said it had been informed that Mr Wynn had declared the 2010 stockholders’ agreement “invalid” and agreed to give up control over his ex-wife’s shares of the company, given his resignation a few days earlier as chairman and chief executive of the casino group amid allegations of sexual misconduct.

Mr Wynn and Mr Okada have been feuding for about six years, since the Wynn Resorts’ board decided to remove Mr Okada, alleging that he was “unsuitable” to be a Wynn Resorts director and was a threat to the firm’s gaming licences. Universal Entertainment is still seeking return of the 24.55 million shares it held in Wynn Resorts.

In Friday’s filing, Universal Entertainment said the group had sent a letter to Mr Wynn, Ms Wynn and Wynn Resorts stating that the stockholders’ agreement “is a three party agreement among them and Aruze USA Inc, and that Aruze USA has numerous pending claims in this case which assert that the stockholders’ agreement is valid and enforceable”.

“Mr Wynn’s statements that now, in his view, the stockholders’ agreement is not enforceable against Ms Wynn, do not resolve in any way Aruze USA’s claims that the stockholders’ agreement is valid and enforceable,” said the Japanese conglomerate.

It added: “Specifically, neither Mr Wynn nor Ms Wynn can sell their respective shares in Wynn Resorts without the required approval of Aruze USA under the terms of the stockholders’ agreement or until Aruze USA’s claims in this case are resolved.”

The group said additionally it continued to seek “invalidation of the redemption in February 2012 and return of its shares of Wynn Resorts stock”.

Universal Entertainment said in the filing that as of October 31, 2017 – and according to what it described as an “expert report” – it should be entitled to approximately US$4.5 billion in damages “for the invalid redemption”.

In a separate filing on Monday, Universal Entertainment announced that its wholly-owned Hong Kong subsidiary Tiger Resort Asia Ltd had taken out loans amounting to JPY33 billion (US$309 million) from third party companies.

“The proceeds of the borrowing will be additionally allocated to construction of Okada Manila [casino resort],” said the firm. “The company is planning to execute the borrowing immediately,” it added.

Universal Entertainment developed and operates – via a subsidiary – the Okada Manila casino resort in the Philippines. The property had a soft launch in December 2016 but has since been progressively opening additional facilities.