Steve Wynn to sell shares of Wynn Resorts
Steve Wynn has notified Wynn Resorts that he plans to sell his shares, potentially pre-empting a decision by regulators in Massachusetts and Nevada to force him to do so.
Regulators in Nevada and Massachusetts are investigating claims that Steve Wynn sexually harassed female employees over a period of decades. Wynn strongly denies the charges. If regulators determine the claims make Wynn an “unsuitable licensee,” the businessman may be forced to cut his stake below 5 percent. Their decision may come as early as the end of April.
Wynn owns 12.1 million shares, or 11.8 percent of the company.
“Mr. Wynn disclosed that he intends to sell all or a portion of the common stock controlled by him,” the company said in a Securities and Exchange Commission filing Wednesday morning. “If he elects to sell any such common stock, he will seek to conduct such sales in an orderly fashion and in cooperation with the company.”
The announcement was expected after a judge last week invalidated a 2012 amended shareholder agreement between Steve Wynn and his ex-wife Elaine Wynn. The agreement prohibited one side from selling their shares without the consent of the other.
Wynn’s stake is valued at $2.2 billion based on Tuesday night’s market close. Elaine Wynn owns 9.5 million shares, valued at about $1.75 billion.
The 76-year old billionaire agreed not to sell more than one-third of his stock, or 4,043,903 shares, in any quarter, according to Wednesday’s filing. Elaine Wynn has no restrictions. She has not stated how or when she will sell her shares.
Takeover Speculation
The Wynns’ combined 21 percent stake and Steve Wynn’s control of the board has made a hostile takeover of Wynn Resorts difficult. But with both potentially selling their stakes, it opens the door to an unsolicited bid by a competitor or hedge funds, Wall Street analysts have said.
Wynn Resorts could seek to prevent such a turn of events by buying back some or all of the shares owned by the former couple.
Jefferies analyst David Katz said the company is generating enough cash flow to quickly pay down the debt needed to acquire such a large stake.
“We still believe Wynn [Resorts] has the resources to redeem the Wynns’ shares,” Katz said in a note on Wednesday.
The Las Vegas-based company is forecast to have $1.2 billion of cash on its balance sheet by the end of 2018 even after accounting for a $2.4 billion settlement this month with former shareholder Universal Entertainment Corp, he said.
Wynn Resorts is generating between $1.6 billion and $1.8 billion in free cash flow a year, said Katz. Wynn Resorts would have a debt leverage of 5.2 times by 2019 if it bought all $4 billion worth of shares.
Wynn shares fell $5.27, or 2.9 percent, to $178.92 Wednesday.
Contact Todd Prince at 702-383-0386 or tprince@reviewjournal.com. Follow @toddprincetv on Twitter.
A buy-back precedent
Kirk Kerkorian owned 91.2 million shares of MGM Resorts International when he passed away at the age of 98 in June, 2015. The stake was equivalent to 16.2 percent of the casino operator.
The billionaire left instructions to Tracinda Corp., his estate’s holding company, to execute an orderly sale of the shares.
Since 2016, Tracinda has been selling MGM shares, typically in blocks of 10 million, directly into the market or to MGM Resorts.
The holding has sold 64 million shares, raising more than $1.6 billion. It still owns 27.2 million shares worth roughly $1 billion.
