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Hearing over Wynn’s UM donation deferred
A court hearing on a legal dispute that involves a HKD 1 billion donation from gaming operator Wynn Resorts to the University of Macau (UM) was postponed in Nevada State, USA, at the request of lawyers.
The US-based company and Japanese pachinko tycoon Kazuo Okada were due in court yesterday for a hearing on Okada’s request for access to Wynn financial records over the use of funds.
The hearing was postponed until March 8 at the request of the lawyers, Mary Ann Price, a spokeswoman for the Nevada state court in Las Vegas, told Bloomberg. Price couldn’t immediately say which side had asked for the delay.
Judge Elizabeth Gonzalez on February 9 declined to rule on Okada’s request for a court order that, as a director, he was entitled to inspect the company’s books and records. The judge had ordered lawyers for Wynn and Okada to return to court yesterday so she could decide whether Okada’s request was “reasonable.”
Okada, a billionaire who through his Tokyo-based Universal Entertainment Corp. held the largest single stake in Wynn, sued last month, claiming the company hadn’t provided information he requested about a pledge to UM, the use of USD 30 million he invested in 2002, and an amended stockholders agreement.
In May last year Wynn Macau donated MOP 200 million to University of Macau Development Foundation. The company has committed to donating MOP 80 million to UMDF every year until 2022, the same year its gaming license comes up for renewal.
In his suit, Okada hinted that the pledge was an attempt to ensure the license is renewed or at least to get the approval for a Cotai resort.
On Sunday, Wynn Resorts bought out Okada and asked him to quit the board. And the board of local subsidiary Wynn Macau will meet today to discuss removing the Japanese billionaire as non-executive director, Reuters said, quoting unnamed sources.
“I don’t think the time has been confirmed yet, but we are talking about” an emergency meeting, Allan Zeman, Wynn Macau vice chairman told Bloomberg. “I’m still waiting to hear from the lawyers here.”
Another unidentified source close to Okada, quoted by South China Morning Post, said the tycoon would likely continue with the lawsuit even if he were forcibly removed as a company director.
Meanwhile analysts are beginning to fear the impact of a prolonged legal dispute on the company. Fitch Ratings lowered its outlook for Wynn Resorts from ‘positive’ to ‘stable’ on Wednesday.
The company “expects the expanding legal battle between Wynn Resorts and principal shareholder Kazuo Okada to heighten risks of an adverse legal or regulatory outcome as investigations surrounding the dispute continue”.
“We expect additional litigation to occur, so there is risk related to the uncertainty of the ultimate outcome and potential financial effect,” Fitch wrote.
“The major risk is that investigations surrounding the dispute reveal unsuitable conduct with respect to Wynn, thereby jeopardizing its existing gaming licenses [in Las Vegas and Macau], or its potential attractiveness as a bidder in new gaming market opportunities,” a note to investors says.
“We believe it is possible that both Nevada and Macau regulators could pursue investigations regarding the dispute,” Fitch wrote.
On Monday, the Gaming Inspection and Coordination Bureau director Manuel Joaquim das Neves confirmed to MDTimes it had “already asked for more information and our legal advisors will look into these allegations and whether there was any breach of Macau laws, gaming licenses or concession contracts”.
Wynn Resorts redeemed the 24 million shares held by an Okada-controlled company by issuing a 10-year USD 1.9 billion promissory note for the stock, which at last Friday’s closing price New York trading would be worth much more, around USD 2.76 billion.
In the first trading session after the decision was announced, Wynn Resorts’ stock rose six percent, the most in more than two months, and the largest on the main New York benchmark, Standard & Poor’s 500 Index.
But now, after Standard & Poor's Ratings Services, Fitch is the second credit rater to lower its outlook on Wynn Resorts.
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