Steve Wynn to go public for Le Reve

June 18, 2002 10:42 AM
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When Steve Wynn added up the numbers for his planned Le Reve resort, he realized that he would need help from Wall Street to put the financing in place.

Even though he had vowed he would never again operate a public company, the man responsible for raising the Las Vegas Strip to a higher level was forced to capitulate.

On Monday Wynn filed a registration form with the Securities and Exchange Commission for an initial public offering to generate cash needed to build a $2.4 billion facility that promises to outdo his previous ­­efforts at The Bellagio and The Mirage.

The filing did not list the number of shares to be offered or at what price but it did say the underwriters would be Deutsche Bank Securities; Bear Stearns, Banc of America Securities and Dresdner Kleinwort Wasserstein. Proceeds are expected to amount to about $355 million.

There also will be $350 million in second mortgage notes to be filed by Wynn Las Vegas LLC and Wynn Las Vegas Capital Corp. Additional borrowings are also planned.

Groundbreaking on the site of the former Desert Inn is scheduled for September with a public opening set for March 2005.

Specified goal of the developers is to "Apply the Wynn brand and experience to create a ”˜must visit’ destination casino resort on the Las Vegas Strip." Although the property will not be themed, as has nearly all the hotel/casinos built during the 1990’s, Le Reve "will provide an experience of the highest standard of luxury in an atmosphere of casual elegance."

The property, to be built by Marnell Corraro Associates Inc., will have 2,701 rooms and suites; 18 dining outlets, including six fine-dining restaurants; a "casually elegant casino, including a distinctive baccarat salon and high-limit private gaming rooms; an eight story, manmade ”˜mountain’ enclosing an approximately three-acre lake in front of the hotel, and an exclusive 18-hole championship golf course."

Monday’s filing also dealt with a partnership arrangement that Wynn developed with Kazuo Okada, principal owner of Aruze Corp. of Japan. Okada purchased a 47% interest in Wynn’s original company, and that interest will automatically be transferred to the new Wynn Resorts Ltd. upon the closing of the IPO.

Okada had difficulty being licensed in Nevada because of tax charges in Japan but these charges were recently resolved by a court in Okada’s favor. However, the prosecution is appealing the decision. If Okada is denied licensing in Nevada, an agreement will be implemented offering the minority position to Wynn.

If the IPO is successful, Wynn Resorts Ltd. will trade under the Nasdaq symbol of "WYNN."

Meeting questioned

Representatives of the Illinois gaming licensees met last week for an "informational meeting," after legislators passed a substantial gaming tax hike.

Apparently, the meeting doesn’t sit well with state bigwigs.

Monday, the Illinois attorney general’s office issued subpoenas to all the casino operators to confirm that a meeting was held and to determine whether the riverboat operators planned to work against the tax increase.

A spokeswoman was quoted as saying, "The concern is that any action taken by the operators that has an economic impact on the state could run afoul of state or federal antitrust laws."

Oddly, the attorney general’s reaction came despite the fact that the proposed tax hikes bill has not been signed into law by the governor, as yet. However, he reportedly participated in discussions that resulted in the legislation being passed and is expected to sign the bill.

Penny Progressive

Aristocrat Technologies Inc. has developed penny denominations for its highly-successful progressive slot Cash Express. Shipments of the penny version of the slot progressive began last month to Nevada casinos.

Cash Express is the first Hyperlink game available in penny denomination and joins the ranks of more than 40 Aristocrat games currently available in penny denominations.

"Penny Slots are constantly increasing in popularity," explained Dave Lucchese, vice president of sales for Aristocrat. "With the Hyperlink system, banks of Aristocrat video games are linked to four levels of progressive jackpots."

Jail time

Looks like jail time Jay Cohen, the former Caribbean-based Internet bookmaker who challenged New York State’s right to charge him with illegal gambling. He had appealed a conviction that he had violated the federal Wire Wager Act.

Monday, the U.S. Supreme Court refused to review his 2000 conviction.

Cohen, a former options trader, was a partner in the Antigua-based World Sports Exchange Ltd. He and his partners were charged with illegal gambling but only he left the protection of the Caribbean to challenge the law. His position was that since the bets were accepted in Antigua where they were legal there was no violation of U.S. law.

The New York prosecutors argued successfully that bets made by state residents actually were wagers made in New York and the information was traveling across state lines to a foreign country.

Cohen has been sentenced to 21 months of jail time.

Credit Card ban

Pressured by the attorney general of New York State, Citibank, the giant banking institution, has agreed to block credit card customers from using their cards to make online gambling wagers.

Although the effort was made to curb gambling between New Yorkers and illegal Internet companies, the impact might also affect the country’s pari-mutuel industry. The matter was less than clear on Monday.

Atty. Gen. Eliot Spitzer said he was not aware of any "legal" online betting in New York State. However, there are interactive online gaming companies that offer home wagering throughout the country.

Observers said the impact on the racing industry might be determined by just how Spitzer views the law and whether he will view legitimate account wagering as a permitted activity.

Consolidating power

Looking to clarify its position on the board of directors of JCC Holding Company, Harrah’s Entertainment Inc. (HET) has designated Gary Loveman and Steve Brammell to replace resigning directors Phil Satre and Anthony Sanfilippo.

Satre is Harrah’s chairman and CEO and Sanfilippo is president of Harrah’s Central Division.

Both Loveman, Harrah’s president and COO, and Brammell, Harrah’s senior vice president and general counsel, have been approved by the Louisiana gaming regulators. They will join Eddie N. Williams, a Harrah’s director, on the JCC Board.

Booming slots

The two Native American casinos in Connecticut continued to show dramatic growth in slot machine revenues in May. According to state officials, gamblers dropped $1.6 billion into the 13,000 machines on the two casino floors.

At Foxwoods, the slot revenues reached $69.4 million while the number topped $62 million at Mohegan Sun.

Those numbers are expected to continue to rise. Next weekend, Mohegan Sun will hold a grand opening party for its new casino expansion and its new parking garage.

Joining forces

TVG, the interactive horse racing network subsidiary of Gemstar-TV Guide International Inc. (GMST), has taken an equity position in Youbet.com (UBET), one of the top three online live event wagering companies in the U.S.

TVG exercised its first warrant to purchase 3,884,650 shares of UBET at $.001 per share. This gives TVG approximately 16.6% of the total number of UBET shares outstanding.

Last year, in order to license certain track content and intellectual property from TVG, UBET agreed to pay fees to TVG based on the amount of business generated by UBET from wagering activity.

In addition to this first warrant, TVG holds a second warrant to purchase up to 51% of the number of Youbet.com common shares outstanding on the date the warrant is exercised.

Youbet.com officials took the action as a vote of confidence in its business plan. Said CEO Dave Marshall, "We are pleased that TVG has recognized our success in growing Youbet.com’s product offerings and building a dynamic management team."

Actually, both companies compete for business among horse players who want to bet from places away from the track. The third company in competition for the home wagering dollar is ExpressBet operated by Magna Entertainment Inc. (MIEC).

Withholding their wagering signals from each other are TVG and and Magna Entertainment. Youbet.com, however, maintains strategic relationships with both companies.

The Insider

Visitor volume in Las Vegas declined during the month of April, according to figures released by the Las Vegas Convention and Visitors Authority. Total visitors recorded amounted to 2.9 million, about 3.3% lower that April 2001. Also, total hotel occupancy levels dropped by 4.2% from 91.7% to 87.5%.

Pinnacle Entertainment Inc. (PNK) has announced an agreement to sell 60 acres of land in Inglewood, Cal., for $36 million to Rothbart Development Corporation.

Analyst Joyce Minor at Lehman Brothers has upgraded Boyd Gaming (BYD) from a buy to a strong buy.

Mandalay Resort Group (MBG) says a proposed tax hike in Illinois would cost the company about $40 million in annual operating income.

Voters in seven southern Maine municipalities have voted resoundingly against casinos in their towns.

Revenue bonds totaling $315 million will be used by the Seminole Indians in Florida to build Hard Rock Hotel and Resort projects in Tampa and Hollywood, Fla.

Adjusted plans for the purchase of Louisiana Downs in Bossier City, La., will result in the facility being owned completely by local investors. Originally, a group from Texas had been expected to be participants but those plans have been scrapped.

Ameristar Casinos Inc. (ASCA) has amended its credit agreement to reduce its borrowing costs and to improve its flexibility.

Argosy Gaming Company (AGY) has been named on of the top 100 hot growth companies in the U.S. by Business Week magazine.

The investment banking firm of Wells Fargo Securities has initiated coverage of WMS Industries Inc. (WMS) with an underperform rating.

The newly-established California Control Commission has assumed responsibility for allocating slot machines to the state’s Indian casinos.

Reports last week indicated Argosy Gaming Company is considering eliminating slot participation games from its gaming floors. Some 70 machines are involved.

Business is improving at Casino Windsor, located across the river from Detroit, Mich. The operators indicated that difficulty entering Canada from Detroit had hindered its business following the 9/11 attacks. However, business during the first quarter of the year was down 17%, an improvement from the previous quarter when business had plunged 23%.

Scientif