Okada heads to court to regain Wynn shares for board fight
LOS ANGELES (Reuters) - Lawyers for dissident Wynn Resorts (WYNN.O) shareholder Kazuo Okada's will urge a Nevada court on Tuesday to overturn the casino company's forced redemption of the Japanese billionaire's $2.7 billion stake, a ruling which would allow him to vote at its November 2 shareholder meeting to unseat two board members.
Okada said on September 17 that he would nominate Yale law professor Jonathan Macey and former CBS Corp (CBS.N) Chief Financial Officer Fredric Reynolds for the company's 12-person board. Okada, who remains a board member, held a 20 stake in Wynn when the board voted in February to rescind the shares.
Wynn has rejected the nominations as invalid, calling it an attempt to divert attention from the issues facing Okada and his holding company, Aruze USA Inc.
The high-stakes legal battle pits Okada, formerly Wynn's largest shareholder, against Wynn CEO Steve Wynn in a nearly year-long struggle. Each billionaire claims the other made improper payments to win favor in their respective Asian markets.
Wynn forcibly bought back Okada's stake, valued at $2.7 billion, at a 30 percent discount after an internal probe by former FBI director Louis Freeh revealed that Okada had allegedly violated U.S. anti-corruption laws.
Okada's Universal Entertainment Corp 6425.OS is Japan's largest pachinko manufacturer.
"Given the ticking clock aspect, I expect this litigation will be a full-time job up until November 2 and that any ruling by the judge is highly likely to be appealed," said Jacob Frenkel, a partner with Shulman Rogers in Maryland.
Okada's lawyers say the contract under which Okada first bought his stake in Wynn precluded a forced redemption. They also say Wynn's rationale, based on concerns the company's standing with gaming regulators is threatened due to Okada's alleged conduct, was without merit since no charges were proven.
Wynn argued its actions were justified because Okada's alleged payoffs to regulators at the Philippines Amusement and Gaming Corp (PAGCOR) were potential violations of the Foreign Corrupt Practices Act (FCPA), therefore threatening Wynn's standing with gaming regulators in Nevada and Macau.
In his lawsuit, Okada "disputes that any redemption has occurred" and alleges that Wynn "undertook a secret investigation" to force him off the board and "committed a series of predicate acts of racketeering, which include fraud."
Okada's countersuit alleges that Steve Wynn "has run Wynn Resorts as a personal fiefdom," and that his shares were worth $2.7 billion, well above the $1.9 billion Wynn paid him in a 10-year note that was a 30 percent discount to the market.
In court filings, Okada said shareholders have lost confidence in Wynn's management and board, citing the stock's decline of 30 percent this year. He has claimed that only seven of the 12 board members are independent, using Nasdaq listing standards.
In August, Okada filed a defamation lawsuit in Japan against the casino company related to the forced redemption of his shares in February.
Okada claimed $140 million (11.2 billion yen) in damages, alleging Wynn's actions led to a fall in Universal's stock price and new business opportunities, and damaged his reputation.
The case is Wynn Resorts Ltd vs Kazuo Okada, an individual, et al, U.S. District Court, Clark County, Nevada, No. A-12-656710-B