Wynn withdraws Macau announcement, shares climb
LOS ANGELES (Reuters) - Wynn Resorts Ltd (WYNN.O) retracted an announcement that it had advanced a major project in Macau, saying it had been made in error after its shares surged on the news.
The stock, halted after that initial run-up, resumed trade shortly after and closed up 4.27 percent at $127.27.
Earlier on Friday, Wynn said a land concession contract had been published in the official gazette of Macau, a step toward allowing the company and a partner to develop a long-envisioned luxury hotel and casino resort in the world's largest gambling market.
But the company then back-pedalled, saying an "agent" had erred and had not been authorized to file that statement. Wynn's lawyers Skadden, Arps, Slate, Meagher & Flom apologized via a statement later for their error, blaming the slip-up on a clerk in their filing department without elaborating further.
"Many are speculating this (Macau project) is ready to go. The stock is reacting on that view," said David Bain, managing director with Sterne, Agee & Leach.
Friday's unusual turn of events come as Steve Wynn, the mogul who runs Wynn resorts, is embroiled in a bitter battle with Japanese billionaire and former friend Kazuo Okada.
Last month, Wynn Resorts redeemed Okada's nearly 20 percent stake in the company and accused him of violating U.S. anti-corruption laws, citing a report produced after an internal probe. Okada said the report is based on "false and misleading assertions.
Okada has said he is seeking to file a lawsuit for a temporary restraining order and preliminary injunction to protect the interest of his subsidiary, Aruze USA Inc, in Wynn Resorts, and to prevent the redemption of its shares.
"As of right now, we don't see a huge risk of Wynn being negatively affected by the whole Okada saga," Morningstar analyst Chad Mollman said. "Where they are at risk is if they were to give back Okada's shares. That would be a huge negative on the stock."
For now Mollman is maintaining his fair value estimate of $175 per share, noting that if Okada is unsuccessful in blocking the redemption of the shares at a steep discount, the redemption stands to increase his fair value estimate by $25 per share or more.
While casino companies in the past have forcibly redeemed shares of shareholders deemed unsuitable, historically this has occurred following an outside regulatory finding. Analysts say this appeared to be the first time a casino company is redeeming shares ahead of such a finding.
Wynn is proposing the development of 51 acres of land in the Cotai area of Macau for development into its third resort in the city, encompassing a five-star hotel, gaming areas, retail, entertainment, food and beverage, spa and convention offerings.
Analysts have been keen to pin down a specific timeline on that project, which Chief Executive Steve Wynn has said will house 500 game tables; 1,500 rooms, mostly suites; restaurants and stores, and a theater.
The "report regarding the gazetting of the Cotai Land Concession Contract on Form 8-K ... was filed by mistake by the Company's agent," Wynn said in a filing after withdrawing its statement on Friday.
"The filing was not authorized by the Company. The Cotai Land Concession Contract has not been gazetted. The purpose of this filing is to retract the Land Concession 8-K in its entirety."
Subsidiary Wynn Macau (1128.HK) said in September it had formally accepted the terms and conditions from the government regarding land for the complex.
Prior to the trading halt, Wynn shares were up $7.70, or 6.3 percent, at $129.76 on Nasdaq.