Elaine Wynn Seeks to Liquidate 10 Million Shares of Wynn Resorts, Worth about $1 Billion
Elaine Wynn, the ex-wife of Wynn Resorts founder, Steve Wynn, has raised the stakes in her bid to gain control of 10 million shares of the Las Vegas casino company. Elaine Wynn would like to get her hands on her 10 million shares in order to sell them, but a 2010 deal with Steve Wynn and Japanese businessman, Kazau Okada, a former business partner, prevents such a transaction. Thus, Elaine Wynn is in a position where she owns ten million shares of a company, but cannot liquidate those assets.
On Monday, she told a Nevada judge that her ex-husband had orchestrated her removal from the Wynn Resorts board of directors in 2015 as a form of retaliation. She claimed he wanted to retaliate, because she had asked hard questions about alleged “reckless mismanagement” of the Wynn Resorts’ brand.
Charges “Reckless Mismanagement”
In her court filing, Elaine Wynn questioned her ex-husband’s use of a private criminal defense attorney and a private gaming attorney, which is seen by her as unorthodox. Even worse, she said he made a multimillion dollar payment to settle a case involving allegations of series misconduct, which occurred on Wynn Resorts property and involved an employee.
Elaine Wynn claims the 2010 shareholders agreement is non-binding, because another signatory to the deal, Kazau Okada, had similar terms waived from his agreement. Kazau Okada had to sell his 20% stake in Wynn Resorts, because he became embroiled in an international bribery scandal involving a casino development in the Philippines.
Kazau Okada Divestment
After the scandal came to light, the Japanese gaming executive had to divest himself of the Wynn Resorts stock. Before that time, he had signed an agreement stating he would not sell his shares of Wynn Resorts stock. Because Kazau Okada’s terms proved to be ephemeral, Elaine Wynn’s lawyers argue her shares be released. It’s an interesting argument, given the fact Elaine Wynn presumably would be able to touch her assets, if she were involved in wrongdoing (like Kazua Okada).
To press her claim, Elaine Wynn has hired a new team of lawyers. She is seeking an unspecified amount of money in compensation, as well as punitive damages in the case. That case is based upon charges of fraud against Steve Wynn, along with other accusations.
Steve Wynn Calls Filing “Lies and Distortions”
Steve Wynn released a statement about the charges, claiming the case was full of “lies and distortions”, which he considered an embarrassment for Elaine Wynn and her lawyers. The press release also said the case was being brought by Elaine Wynn to inflict pain on him.
In the case of her charges that he misused funds to pay off a company employee in 2009, Steve Wynn claims Elaine knew of those arrangements as early as 2009. In 6 years of sitting on the board, the press release says, Elaine Wynn never informed a board member of the alleged misconduct.
Bloomberg News claims Elaine Wynn owns 21% of Wynn Resorts. According to the online publication, her 10,000,000 shares are worth approximately $1 billion — sometimes reported as closer to $900 million. That sounds like massive wealth, but it is not as useful to a person as one might think, if they cannot liquidate the assets.
Steve Wynn negotiated such terms, because if Elaine Wynn sold her 21% to an activist investor or rival gaming company, it would give those people tremendous leverage moving forward. Steve Wynn could lose control of the company he founded, or be forced to deal with trouble on the board of directors.
Current State of Wynn Resorts
Wynn Resorts has undergone a couple of bad years. For a decade, Wynn Resorts’ Macau casino, Wynn Macau, had fueled tremendous revenue growth for the company. The growth had helped the company weather the Global Recession of 2008-09 better than most other U.S. gaming companies.
In 2014, the Macau gaming market underwent a significant downturn, due to a corruption crackdown and the lost of the VIP high rollers coming from Mainland China. Wynn Resorts has seen its share prices drop between 40% to 50% at times throughout 2014 and 2015.
The casino company has had its successes. Steve Wynn’s company won the rights to build Wynn Everett, the first-ever casino built in the Greater Boston metropolitan area. Steve Wynn is also building a massive new integrated resort on the Cotai Peninsula in Macau, the Wynn Palace, which is expected to open in 2018.