Wynn Resorts 7 million share
sale hits falling market

May 11, 2004 5:58 AM

Steve Wynn says he needs more cash to complete the construction of Wynn Las Vegas on the Las Vegas Strip but he appears to have picked a tough time to offer seven million shares for sale to Wall Street investors.

On Monday, shares in Wynn Resorts Limited (WYNN) fell $1.43 a share to $36.82 with a large number of shares — 1,345,533 — changing hands. This drop, although consistent with other market activity and particularly with other gaming shares, came on top of a decline Friday of $2.02 per share.

According to a company announcement, the public offering is being made through Deutsche Bank Securities Inc., as the sole book-running manager, with Banc of America Securities LLC and Bear, Stearns & Co. Inc., as co-managers. Wynn Resorts said the underwriters also have been given an option to purchase up to an additional 1,050,000 shares to cover over-allotments, if any.

Assuming an average sale price of $38.50 a share, net proceeds of the sale of common stock, was expected to be about $268.1 million after deducting underwriting discounts and estimated offering expenses. These proceeds will be used to redeem a portion of the company’s 12% Second Mortgage Notes due 2010. The remainder will be applied to costs of the $2.4 billion hotel/casino/resort that is expected to anchor future development in the northern end of the Las Vegas Strip.

The company added that some of the net proceeds may be used to finance the proposed development in Macau or possibly to finance potential future acquisitions.

In a separate announcement last week, Wynn Resorts Limited said it had expanded its board of directors with the appointment of Kiril Sokoloff. The board now has 11 members.

Sokoloff, an author and a recognized expert in the area of investment in the Hong Kong/China area, is president of 13D Research Inc., an independent financial research firm.

Negative votes

Caesars Entertainment Inc. (CZR) hopes of constructing a casino complex in the Twin Cities’ Mall of America area may have been dashed last week with a Minnesota House Tax Committee’s rejection of a pair of casino bills.

The first bill before the committee was a project proposed by the Red Lake and White Earth Indian tribes for a casino just north of St. Paul. The plan was rejected 13-9. A second plan for a casino in the Twin Cities area to pay for three stadiums never received a vote.

Democratic lawmakers have opposed the expansion of gambling in the state while many Republicans believe that if a casino is approved it should be privately operated.

Further casino discussion is expected in the state senate this week but only a proposal to permit Canterbury Race Track to increase the number of tables at its card club is given any chance of approval.

THE INSIDER: Feeling the impact of Indian casino competition, the California Lottery is seeking support for reorganization legislation that would include higher prize money and the use of Nevada-style gambling themes such as roulette, dice, baccarat, blackjack and draw poker.

Shuffle Master Inc. (SHFL) says its board of directors has authorized the repurchase of up to $30 million of its common stock in the open market.

Caesars Entertainment Inc. (CZR) will take an $8 million charge because of a court ruling involving the deductibility of state gaming taxes.

Harrah’s Entertainment Inc. (HET) disclosed last week that it paid $39.7 million for the rights for the World Series of Poker and the rights to the Horseshoe brand name in Nevada.

Churchill Downs Inc. (CHDN) said it will revise its financial statements to account for reclassified "host fee" expenses. The revisions are not expected to impact the company’s gross profit.

Isle of Capri Casinos Inc. (ISLE) said it has appointed Bob Fiore and Nancy Donovan as regional vice presidents.