Jackpot for Wynn Macau shares

Shares of Hong Kong-listed Wynn Macau rose yesterday on news that parent company Wynn Resorts has forcibly bought out the 20 per cent stake owned by Japanese gaming tycoon Kazuo Okada.

The stock rose 3 per cent to HK$20.90, while the Hang Seng Index dropped 0.3 per cent.

Okada's Universal Entertainment, meanwhile, fell by the daily maximum of 21 per cent, the biggest drop since its listing in September 1998, to 1,516 yen at the close of trading in Tokyo.

Wynn asked Okada, the largest shareholder of the Las Vegas-based Wynn Resorts, to step down as a director and accused him of improper payments to Philippine gambling officials.

Wynn Resorts bought the stake owned by Okada and his associates at a 31 per cent discount after a year-long internal probe. The report following the investigation, chaired by former Nevada governor Robert Miller and former FBI director Louis Freeh, says Okada violated US anti-corruption laws as it uncovered US$110,000 of cash payments and gifts to gambling regulators.

Wynn Resorts said it also would recommend Okada's removal from the board of Wynn Macau.

Okada, who made his name making pachinko machines, vowed legal action to protect the value of his company's stake and called Wynn Resorts' move 'outrageous'.

'The decision by the Wynn board, which followed a rushed investigation that lacks absolute findings, to redeem Universal Entertainment's nearly 20 per cent holdings in Wynn Resorts based on its project in the Philippines is outrageous,' the company said. 'We have not even been provided with the opportunity to review' the report, it added.

Wynn Resorts bought back the 24 million shares held by Aruze USA, a pachinko company controlled by Universal, and promised to pay him by issuing a 10-year US$1.9 billion promissory note. Okada's stake would be worth US$2.77 billion at the February 17 closing of US$112.69 in New York, 31 per cent more than Wynn is paying for it, not including the cost of the 10-year waiting period. The note bears 2 per cent interest.

The partnership between Las Vegas casino magnate Steve Wynn, also chairman and chief executive of Wynn Resorts, and his long-term partner Okada, who helped bankroll the company 12 years ago, soured over the Japanese billionaire's plan to build a casino project in the Philippines and the US casino operator's donation to the University of Macau.

A unit of Okada's Universal Entertainment got a licence to build a casino in 2008, which he will build without Wynn. Okada broke ground for the project last month.

Okada sued Wynn Resorts in Nevada last month demanding access to its financial books over a HK$1 billion donation to the University of Macau Development Foundation and other transactions. Wynn Resorts in return is suing Okada and his companies for breach of fiduciary duty and related offences.