Largest shareholder of Wynn Resorts sues company
The largest shareholder and vice chairman of the Wynn Resorts Ltd. board of directors has sued the company, claiming he has been denied access to the casino operator’s books and records.
Kazuo Okada, 68, a Japanese businessman who controls slot machine maker Aruze USA through his Japan-based Universal Entertainment, said in documents filed Wednesday in Clark County District Court and with the U.S. Securities and Exchange Commission that "despite several written demands, Wynn Resorts insists on keeping its books and records hidden" from him.
Okada indirectly owns 19.66 percent of Wynn Resorts and is one of the company’s founders, investing $260 million in the predecessor of Wynn Resorts in 2000 and another $120 million in 2002 to be used for casino development in Macau. The Japanese restaurant at Wynn Las Vegas has carried his name since the resort’s opening in 2005.
Okada, through his attorneys, said he "has the right and obligation to be informed concerning the company’s business so that he may ensure that it is being managed properly for the benefit of all of its shareholders."
A spokeswoman for Wynn Resorts declined comment.
According to the lawsuit, a $135 million donation by Wynn Resorts to the University of Macau Development Foundation last year led Okada to seek access to the company’s books and records. Okada reportedly objected to the donation, which consisted of a $25 million contribution in May and a commitment for $10 million per year for 11 years.
The donation "appears to be unprecedented in the annals of that University," the filing said.
Okada, who lives in Hong Kong, said the university is on land owned by the Macau government.
"There was no discussion regarding whether such a large gift, over such a long period, is an appropriate use of corporate funds," the lawsuit said.
In court papers, Okada said he was rebuffed in November when he sought information regarding the donation, the use of $30 million that Aruze USA invested in Wynn Resorts in April 2002 and a 2010 amendment to the stockholders agreement among Okada, Steve Wynn and his former wife, Elaine Wynn.
The Wynns filed for divorce in March 2009. A January 2010 SEC filing reported that more than 11 million shares of Wynn Resorts previously held as community property were transferred to Elaine Wynn, leaving Steve Wynn an equal number of shares.
Okada’s Aruze USA holds more than 24.5 million shares of Wynn Resorts, more than double Steve Wynn’s roughly 9 percent stake.
According to the lawsuit, Steve Wynn procured an amendment to the stockholders agreement that "purports to impose restrictions on the shares of Wynn Resorts owned by Aruze USA and Ms. Wynn and confirm the ability to Mr. Wynn to exercise certain rights in respect of such shares."
In rejecting Okada’s request to view the books and records, Wynn Resorts asked for evidence that the $30 million investment had even occurred, according to court papers.
Aruze USA provided evidence, and Wynn Resorts acknowledged receipt of the $30 million and the additional $90 million invested by Aruze USA.
"Nevertheless, the company still denied access to any records showing how the funds were used," the lawsuit said.
Two more requests in late November and in early December also were denied.
Okada is also a director of Wynn Macau Ltd. He founded Universal Lease Co. Ltd. in 1969, which became Aruze Corp., in 1998.
In 2009, the Aruze Corp. name was changed to Universal Entertainment Corp., which is a Japanese manufacturer of pachislot and pachinko machines, amusement machines and video games.
Nevada gaming regulators have approved Universal’s suitability as the 100 percent shareholder of a subsidiary, Aruze USA, Inc.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
