Wynn Resorts Ltd. (WYNN) rose the most in
more than two months after repurchasing shares owned by Japanese
businessman Kazuo Okada at a 30 percent discount.
The Las Vegas-based casino owner said Feb. 19 that an
investigation by its board had found Okada made gifts and
payments to foreign casino regulators and was thus unsuitable to
be an investor. Okada’s company, Universal Entertainment Corp. (6425),
said the following day that it would “take all legal actions
necessary to protect its investment in Wynn.”
Wynn Resorts has already canceled the 24 million shares
redeemed and an injunction couldn’t prevent that transfer from
occurring, Wynn’s general counsel, Kim Sinatra, said in a
conference call today.
The shares rose 6 percent to $119.40 at the close in New
York, the biggest intraday increase since Nov. 30. The gain was
the largest on the Standard Poor’s 500 Index. (SPX)
Wynn Resorts repurchased the Okada shares for $1.9 billion
with a 10-year promissory note. The price, a 30 percent discount
to market value, was based on independent appraisal by the
investment bank Moelis Co., Wynn Chief Financial Officer Matt Maddox said on the call.
Okada’s shares are worth less than market value because
they are subject to restrictions, which Maddox didn’t specify.
Nobuyuki Horiuchi, a spokesman for Universal Entertainment,
declined to comment. The company has called the sale
“outrageous” in e-mailed statements.
Freeh Investigation
An independent investigation ordered by Wynn’s board and
headed by former Federal Bureau of Investigation director Louis Freeh found that Okada had violated the U.S. Foreign Corrupt
Practices Act in 37 incidents, Robert Miller, a former Nevada
governor and chairman of the board’s compliance committee, said
on the conference call. Among the violations, Okada or his
affiliates paid for the then-head of the Philippine gaming
regulatory body to attend to the 2008 Beijing Olympics.
“Our license would be put under a cloud if we were to not
take action,” Miller said.
Okada visited the office of regulator Philippine Amusement
and Gaming Corp. in Manila, the regulator said in an e-mailed
statement. Okada told the chairman of the regulator, Cristino Naguiat, that the $110,000 in gifts to officials referred to by
Wynn were “complimentary accommodations” granted to Okada’s
business associates from the Philippines and other countries
from 2008 to 2011, according to the authority. The billionaire
also apologized to the regulator for including the agency and
its officials in the dispute, the gaming regulator said.
The Philippine government said yesterday that it’s
“industry practice” for its officials to accept free
accommodations.
To contact the reporters on this story:
Christopher Palmeri in Los Angeles at
cpalmeri1@bloomberg.net;
Shunichi Ozasa in Tokyo at
sozasa@bloomberg.net
To contact the editor responsible for this story:
Anthony Palazzo at
apalazzo@bloomberg.net
Article source: http://www.bloomberg.com/news/2012-02-21/wynn-rises-after-buying-okada-stake-at-discount.html
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