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Financial Times / Biz - Money

Wynn Resorts to pay $2.4bn to settle Universal Entertainment lawsuit

Wynn Resorts will pay $2.4bn to settle a lawsuit with Universal Entertainment, the Japanese gaming group, over the forced redemption of its 20 per cent stake in the casino operator in 2012.

The settlement is part of a contentious battle between Wynn Resorts and Kazuo Okada, the Universal founder who was an early investor and board member of Wynn but who was ousted after falling out with Steve Wynn, the Wynn Resorts founder.

It comes at a turbulent time for Wynn Resorts. Mr Wynn resigned as chairman and chief executive last month, following a report by the Wall Street Journal that he had engaged in a pattern of sexual misconduct towards staff at his resorts. In one case he was alleged to have paid a $7.5m settlement to a manicurist at the Wynn Las Vegas who alleged that he forced her to have sex with him. Mr Wynn has denied the allegations.

Mr Okada and Mr Wynn were long-time business associates and Mr Okada helped fund the creation of Wynn Resorts after Mr Wynn lost Mirage Resorts to a hostile takeover by MGM Grand. Through Universal, Mr Okada held a 20 per cent stake in Wynn.

Wynn forced Mr Okada to give up the shares in 2012 in exchange for a redemption note of $1.94bn, a 30 per cent discount to their market value at the time, and voted him off the board. Wynn accused the Japanese mogul of making “secret plans” to compete with its Macau casinos and of bribing gaming officials in the Philippines, a charge he denies.

Last year, Mr Okada was pushed out of his own business empire.

Wynn said it will pay Universal and its subsidiary Aruze USA the $1.94bn principal amount of the note plus an additional $464m to settle allegations surrounding the interest rate on the note on March 31. 

The Wall Street Journal reported that Mr Okada is not a party to the settlement between Wynn and Universal. A lawsuit from Wynn alleging Mr Okada breached his fiduciary duty is set to go to trial in Las Vegas next month.