Okada loses bid to vote at Wynn shares meeting

Nevada judge dents Japanese billionaire's hopes of reversing a forced redemption of his stake

PUBLISHED : Thursday, 04 October, 2012, 12:00am
UPDATED : Thursday, 04 October, 2012, 3:10am

A Nevada judge has ruled that Japanese pachinko billionaire Kazuo Okada cannot vote at Wynn Resorts' annual meeting next month, dampening his efforts to reverse a forced redemption of his stake in the Las Vegas casino operator.

Nevada state court Judge Elizabeth Gonzalez rejected Okada's request at a hearing in Las Vegas, holding that the Japanese pachinko magnate didn't convince her that he was likely to overcome Wynn's argument that the board's business judgment had validated the redemption.

Okada was once gaming mogul Steve Wynn's business partner and close friend, but their relationship deteriorated in January and thereupon was followed by a legal battle for control of seats on the board of Wynn Resorts unveiled.

In February, Wynn Resorts sued Okada and forcibly redeemed a 20 per cent stake, or 24.5 million shares, owned by Okada, formerly the company's largest shareholder, for a 10-year US$1.9 billion promissory note. Okada said that is a 30 per cent discount from the share's market value, not including the cost of the 10-year waiting period. The two sides have given conflicting accounts of the reasons behind their feud.

Okada said in court filings that Steve Wynn wanted to oust him because he questioned and voted against a more than HK$1 billion donation to the University of Macau last year.

The Wynn Resorts board said Okada was "unsuitable" under Nevada gaming law as a controlling shareholder, claiming he made improper gifts and payments to officials in the Philippines where he is building a casino resort.

Steve Wynn, chairman and chief executive of Wynn Resorts, also dismissed Okada's suggestion that he wanted to get rid of his former business partner because the divorce from his ex-wife Elaine Wynn left him with only half of his stake and Okada as the largest shareholder. Okada was ousted from Wynn's Macau unit in February but remains on Wynn Resorts' board. The Las Vegas company had said in March it would call a special stockholders meeting to vote Okada off the board. That isn't on the agenda for November 2.

Shares of Wynn Macau, the Hong Kong-listed unit , dipped 1.4 per cent yesterday while the city's benchmark Hang Seng Index edged up 0.23 per cent. Sands China fell 1.9 per cent, Galaxy remained flat, while MGM China rose 1.9 per cent.

Richard Huang, an analyst in consumer and gaming research with CLSA, said disappointing news about mainland tourist arrivals into Hong Kong and Macau during the Golden Week holiday was weighing on the shares.

"Underperformance of Galaxy and Sands, as compared to the Macau gaming peers and also the Hang Seng index, is likely due to their strong share price performance in the previous month which triggered some profit taking," Huang said.

Wynn Macau is working on a US$4 billion new project on the Cotai Strip, where it still doesn't have a presence.

The casino giant now operates a single high-end property, which opened in 2006, on the Macau peninsula but Cotai is fast becoming the city's new gaming mecca.