Pachinko billionaire Kazuo Okada’s Universal Entertainment Corp. fell by a record in Tokyo trading after Wynn Resorts Ltd. redeemed Universal’s 20 percent stake at a 31 percent discount and accused Okada of improper payments.
Universal plunged by the daily maximum 21 percent, the biggest drop since its listing in September 1998, to 1,516 yen at the close of trading in Tokyo, after being untraded most of the day as sell orders outnumbered buyers. The pachinko machine maker vowed legal action to protect the value of its stake and called Wynn Resorts’ move “outrageous” in an e-mailed statement today.
Wynn Resorts redeemed the 24 million shares held by Aruze USA Inc., a pachinko company controlled by Universal, and issued a 10-year $1.9 billion promissory note for the stock, according to a statement from the Las Vegas-based casino operator yesterday. The Wynn Resorts stake would be worth about $2.77 billion at the Feb. 17 closing price of $112.69 in New York, about 31 percent more than Wynn paid in the redemption.
“The decision by the Wynn board, which followed a rushed investigation that lacks absolute findings, to redeem Universal Entertainment’s nearly 20 percent holdings in Wynn Resorts based on its project in the Philippines is outrageous,” Universal said in the statement. “We have not even been provided with the opportunity to review” the report by Wynn’s investigation committee, the company said.
Hong Kong-listed unit Wynn Macau Ltd. climbed as much as 5.9 percent to HK$21.50, the biggest intraday increase in almost a month, before trading at HK$20.80 as of 2:51 p.m. local time.
Philippine President Benigno Aquino has asked Cristino Naguiat, chairman of Philippines Amusement and Gaming Corp., for information about Okada, Edwin Lacierda, the president’s spokesman said at a press briefing today. Naguiat will issue a statement today, Lacierda said.
Wynn Resorts Chairman and Chief Executive Officer Stephen Wynn and Okada, who helped bankroll the company starting 12 years ago, have clashed over a donation the U.S. operator made to the University of Macau and Universal’s plan to build a casino resort in the Philippines.
Okada was stripped of his vice-chairman role last year after alleging improprieties in the university donation that’s the subject of a lawsuit and a U.S. regulatory inquiry.
Okada violated U.S. anti-corruption laws and made cash payments and gifts of about $110,000 to gambling regulators in the Philippines, Wynn Resorts said in the statement, citing an investigation it conducted with former Nevada Governor Robert Miller and Louis Freeh, the ex-director of the Federal Bureau of Investigation.
Pachinko, a type of slot machine, generates about 20 trillion yen ($251 billion) in annual revenue in Japan as a form of gambling, according to a 2011 white paper from the Japan Productivity Center, a non-governmental organization.