Published October 19, 2012
LOS ANGELES – Japanese billionaire Kazuo Okada has appealed a court ruling shutting him out of Wynn Resorts Ltd's November 2 annual meeting, but will drop attempts to nominate two independent members to the board of the casino giant.
The Asian pachinko mogul is trying to reverse a forced redemption of his 20 percent stake in Wynn, imposed after an internal investigation concluded that Okada had violated anti-corruption laws. His stake is to be redeemed at a hefty 30 percent discount, valuing it at $2.7 billion.
Okada says the forced action tramples all over his rights as a major shareholder in Wynn, through his Universal Entertainment Corp <6425.OS> and its Aruze USA subsidiary. But on October 2, Clark County District Judge Elizabeth Gonzalez ruled against Okada's motion to reverse that redemption.
On Thursday, Aruze said it will abandon efforts to nominate two directors, because it did not expect a decision on its appeal to come before the shareholders' meeting in any case.
"That said, we continue to believe that Aruze USA, Inc is a shareholder of Wynn Resorts Ltd, that Wynn Resorts' purported redemption of Aruze's shares was wrongful and invalid, and that Aruze is wrongfully being denied its rights in connection with the November 2 shareholder meeting," the company said.
The high-stakes legal battle pits Okada - formerly Wynn's largest shareholder - against onetime friend Steve Wynn. Each billionaire accuses the other of making improper payments in their respective Asian markets.
In February, Wynn dramatically and forcibly bought back Okada's stake after an internal probe by former FBI director Louis Freeh revealed Okada had allegedly violated U.S. anti-corruption laws.
Okada and Aruze are seeking to nominate two board members at the November 2 meeting if they are successful in regaining their shares.
Even though Okada has been stripped of his shares, he remains a board member and can only be removed by a shareholder vote, according to company officials.
Wynn has said that it will hold a special shareholder meeting at some point to vote on removing Okada, but would not give a date. He has already been removed from boards of Wynn subsidiaries such as Wynn Macau Ltd <1128.HK>.
The Vegas tycoon has argued its actions were justified because Okada's alleged payoffs to regulators at the Philippines Amusement and Gaming Corp (PAGCOR) were potential violations of the Foreign Corrupt Practices Act (FCPA), therefore threatening Wynn's standing with gaming regulators in Nevada and Macau.
The case is Wynn Resorts Ltd vs Kazuo Okada, an individual, et al, U.S. District Court, Clark County, Nevada, No. A-12-656710-B
(Reporting By Susan Zeidler; Editing by Bernard Orr)