Wynn Resorts settles lawsuit for $2.4B with Tokyo company
Wynn Resorts has agreed to pay $2.4 billion in a settlement with a Tokyo casino game maker and its U.S. unit over the forced redemption of their shares in the Las Vegas-based casino operating company in 2012.
The company on Thursday announced the settlement with Universal Entertainment Corp., which previously held an almost 20 percent stake in Wynn Resorts through its subsidiary Aruze USA Inc. Wynn Resorts, which is facing scrutiny over sexual misconduct allegations against its founder and former CEO, agreed to pay the sum by March 31.
The legal fight between the companies dates back to 2012, when Wynn Resorts pushed out Universal's founder Kazuo Okada after finding the Japanese tycoon made improper payments to overseas gambling regulators. The actions by Wynn Resorts stemmed from a separate casino resort project Okada was undertaking in the Philippines.
After a year-long investigation led by former FBI Director Louis Freeh, Wynn Resorts said it found more than three dozen instances over a three-year period in which Okada and his associates engaged in "improper activities for their own benefit." That included cash payments and gifts totaling about $110,000 to foreign gaming regulators, the company said.
Okada was ousted from Universal last year over fraud accusations. He has denied any wrongdoing.
Aruze's shares were worth about $2.7 billion when Wynn Resorts forcibly redeemed them in February 2012 and issued a 10-year, $1.9 billion promissory note.
The settlement is the latest in episode in a tumultuous period for Wynn Resorts that began in late January, when the Wall Street Journal reported that a number of women said the company's founder, Steve Wynn, harassed or assaulted them and that one case led to a $7.5 million settlement with a manicurist. Since then, groups of shareholders as well as current and former employees have filed lawsuits against the billionaire and the company's board of directors.
Steve Wynn has vehemently denied the accusations the newspaper reported and attributed them to a campaign led by his ex-wife, Elaine Wynn. Her attorney has denied that she instigated the news story.
Steve Wynn resigned as chairman and CEO of the company Feb. 6. The company on Wednesday announced changes to its board of directors.
The company is also facing scrutiny by gambling regulators in Nevada and Massachusetts. Regulators in Macau, the Chinese enclave where the company operates two casinos, are also inquiring about the sexual misconduct allegations.
The initial newspaper report about Steve Wynn's misconduct sent the company's shares plunging but they have since stabilized.
Alex Bumazhny, gambling analyst with Fitch Ratings, said the agreement announced after the market closed Thursday seems to be a middle ground that Wynn Resorts' "capital structure can digest."
"The settlement is a positive as it removes an overhang for the company although a question remains how Wynn Resorts will fund it," he said.
The settlement ends claims brought by Universal and Aruze against Wynn's China arm, Wynn Macau. But it does not entirely resolve the years-long case in state court in Las Vegas.
While Aruze has agreed to not consider itself a party to a shareholders agreement, Elaine and Steve Wynn remain locked in a fight over the document, which has barred her from controlling her roughly 10 percent stake in the company.
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