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.
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.
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.
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