Wynn Resorts secures $800M line of credit to help pay $2.6B settlement
Wynn Resorts has secured an $800 million line to credit to pay for a multibillion-dollar settlement regarding one of its founders.
The company, which is undergoing a leadership shakeup due to a separate sex scandal and ensuing stockholder revolt, closed a 364-day term loan from Deutsche Bank. Wynn Resorts plans to use the proceeds from the financing, as well as cash on hand, to pay a $2.6 billion settlement to Japanese pachinko magnate Kazuo Okada, who once owned half the company. The settlement is unrelated to the sexual misconduct allegations involving its founder, Steve Wynn.
Last week, Wynn Resorts and Okada’s Aruze USA, a subsidiary of Universal Entertainment Corporation, settled a lawsuit that has lingered since 2012. The dispute stemmed from the forced redemption of Aruze’s 25.5 million shares of Wynn common stock. Okada was pushed out after the FBI launched an investigation into his firm’s possible violations relating to the Foreign Corrupt Practices Act.
Aruze’s stake in the company now has a value of around $4.9 billion.
The settlement came as Wynn Resorts dealt with the fallout from sexual misconduct allegation against its founder Steve Wynn. In January, the Wall Street Journal reported the story of a manicurist who claims that Wynn forced her to have sex with him. More accusers then came forward, with details of encounters stretching back to the 1970s. The newest allegations involved two massage therapists who claim that Wynn coerced them into performing sexual acts more than 50 times between 2006 to 2009.
Wynn resigned last month as chairman and chief executive of the company that bears his name. He was followed out the door by two board members, Ray Irani and Alvin Shoemaker, who announced their departure last week. Wynn has denied the allegations against him, describing the claims of his accusers as “preposterous.”
The accusations have led to several lawsuits from stockholders, who claim that the company engaged in a coverup of Wynn’s alleged misdeeds. Massachusetts pension fund Norfolk Retirement System, Pennsylvania-based Operating Engineers and Construction Pension Fund and investors John and Joan Ferris are the plaintiffs in class action suits against Wynn.
The $2.6 billion agreement settles all claims between Wynn, Aruze and Universal. The settlement, which covers the principal amount from the promissory note and interest, must be paid by March 31.
Source: The Real Deal