If Steve Wynn forgot why he had vowed, while chief honcho of Mirage Resorts, to never again get involved with a public company, he certainly remembers today. Last week, Wall Street put him through the ringer.
Wynn needed funding to get his “Le Reve” destination resort underway on the Desert Inn property that he purchased with funds he received from the sale of Mirage to Kirk Kerkorian’s MGM Grand. He had formed Winn Resorts Ltd. with his partner, Kazuo Okada, whose Aruze Partners is one of the largest makers of pachinko machines in Japan.
Needing to get funding for the new project, Wynn asked Wall Street for close to $2 billion. This required that he put together a combination of equity and bond deals to generate something near $1 billion. With this locked up, he would then receive another $1 billion in a credit line to be drawn down as needed during construction. Also, part of the money was going to be used to get his Macau casino under construction when all the foreign paper work is completed.
Originally, Wynn’s initial public offering (IPO) plan was to sell some 20 million shares at between $21 and $23. That’s when the pressuring and arm twisting began.
By mid-week it was obvious that the share price would be closer to a mid-teen figure and even at that there seemed to be substantial resistance.
Late Thursday, a deal was struck whereby Wynn would sell 34.6 million shares at $13 a share. Also, Wynn and Okada agreed to buy one-third of the offering at the specified $13 a share.
Concurrently, arrangements were made for the sale of junk-rated eight-year second mortgage notes, priced to yield 13.50%, generating $343.3 million.
Still to be arranged are a $188.5 million loan facility for the purchase of furniture, fixtures and equipment, and a credit facility of up to $1 billion to be used to complete construction.
Joint managers of the deal are the brokerage firms of Deutsche Bank Securities, Bear Stearns and Banc of America.
Reportedly, Wynn will begin construction on Le Reve sometime this week.
For the first day of public trading, the shares, using the symbol WYNN, ended the day at $13.01, a penny better than the IPO. There were 13,965,800 shares traded.
Trading slowed to 5.5 million shares on Monday but again the per share price held at $13.01.
Although getting the money proved far more difficult than Wynn anticipated, the effort left Wall Street veterans singing his praises. They noted that pushing an IPO successfully in an atmosphere that discouraged many bigger company managers was a huge achievement.
“If hadn’t been for Steve Wynn’s tremendous track record in operating Mirage Resorts,” said one observer, “and the strong presentations he’s capable of making, there wouldn’t be any WYNN stock trading on the Nasdaq today.”
Alliance Gaming Corp. (ALLY) says it will hold its annual stockholders’ meeting beginning at 10 a.m. (PST) on Dec. 3 at the Four Seasons Hotel in Las Vegas. The company also noted that one of its directors, Morton Topfer, will not stand for re-election.
Tim Lanier, an experienced arena manager from Fort Worth, Texas, has joined Coast Casinos Inc. as assistant general manager of the Orleans Arena. The facility is scheduled to open in the spring of 2003.
Shuffle Master Inc. (SHFL) announced that its board of directors has authorized the repurchase of the company’s shares on the open market. This will be a new share repurchase program that supplements a previous authorization.
Two California Indian tribes are suing the state for allegedly violating gaming compact provisions.
Isle of Capri Casinos Inc. (ISLE) has begun repurchasing up to 1.5 million shares of its common stock. The shares will be purchased periodically in the open market.
A drive has begun in Illinois to have a lame-duck session of the legislature dump existing gaming position restrictions and roll back a recent tax hike on gaming revenues.
Voters next month will be asked to approve the construction of a $40 million hotel and casino in Huntington, West Virginia.
The U.S. Department of Interior’s Board of Indian Appeals has agreed to hear an appeal filed by the State of Connecticut against the recognition of the Eastern Pequot Tribe. The tribe’s intention is to open a casino similar to Foxwoods and Mohegan Sun.
A published report in New York has warned that a loophole in the state gaming law would permit the Seneca Nation of Indians to install video lottery terminals and not cash-type slot machines. Thus, the Indians would not have to share its machines revenues with the state.
The Rhode Island Lottery Commission has scheduled a vote for its November meeting to determined whether its two pari-mutuel facilities — Lincoln Greyhound Park and Newport Grand Jai Alai — will be permitted to increase the number of slot machines at their properties.