(Reuters) - A legal dispute between the founder of Wynn Resorts Inc (WYNN.O) and his longtime partner raised questions about the state of the U.S. casino company’s fast-growth Macau business, sending its shares down as much as 5 percent on Thursday.
Wynn called the lawsuit, filed in Nevada by major shareholder Kazuo Okada, a “preposterous” effort to deflect attention away from a dispute over Okada’s decision to compete with the Las Vegas-based casino operator in the Philippines.
Wynn said the suit, which seeks access to the company’s business records, is without merit and it plans to “vigorously” defend itself.
In the lawsuit, Okada, a Wynn director, said he had voiced objections to an “inappropriate” $135 million donation to the University of Macau by the company. But he was rebuffed when he asked to review the books and accounts related to that transaction.
Wynn said in a statement on Thursday that sources and uses of all pre-IPO capital contributions are detailed in publicly available information and Okada received the same information as all directors with respect to charitable contributions.
Wynn said the dispute also involves Okada’s misuse of his director position to imply the company’s participation in projects Wynn had made firm decisions to avoid.
“The lawsuit will weigh on shares, especially near term. We believe Wynn has carried a premium-equity multiple relative to its growth outlook partially because investors view Wynn a high-quality, safe way to play Macau growth and a Las Vegas recovery,” Sterne Agee analyst David Bain said in a clients’ note.
“While that investment thesis should remain intact, the noise or read-through surrounding Okada’s lawsuit may tarnish investor conviction in the same thesis — at least short term,” Bain said.
Wynn’s stock was down 2.5 percent at $109.07 in afternoon Nasdaq trading after hitting a session low of $104.62.
Reporting By Deena Beasley and Edwin Chan, editing by Mark Porter