By Jeffrey Goldfarb
HONG KONG (Reuters Breakingviews) - Steve Wynn has left the building even if his name is still on it. In just two months since the 76-year-old casino mogul denied sexual-misconduct allegations, he has stepped down from leadership roles at Wynn Resorts and now is selling his entire stake in the eponymous $18 billion U.S. company. Meanwhile, new boss Matt Maddox is making the best of the bad hand dealt to him.
Getting swiftly past a scandal of this magnitude is no easy feat. The board “reluctantly” accepted Wynn’s resignation as chairman and chief executive last month, but it was the best way forward after nearly a fifth of the company’s market value was erased. He is also offloading the rest of what had been a 12 percent stake to a pair of unnamed existing investors at a negligible discount to where the shares were trading. Having the besmirched founder out of the picture should help discussions with regulators, including over licence renewals.
Maddox also helped clear the way for Wynn to sell his stock. Long-running litigation involving the forced redemption of a former Wynn Resorts shareholder, Japanese pachinko-machine maker Universal Entertainment, was settled earlier this month for a hefty $2.6 billion price tag.
As Wynn crossed himself off the shareholder register on Thursday, Galaxy Entertainment was joining it. Wynn Resorts agreed to raise over $900 million by selling a 4.9 percent stake to the rival $39 billion Macau resort operator. The proceeds will be used to repay an arranged $800 million loan to cover the New York-listed company’s litigation tab. Galaxy’s investment also may lead to joint ventures or set the stage for an eventual breakup.
By collaborating, Wynn Resorts and Galaxy could make themselves a more formidable bidder for a gambling project in Japan, Bernstein analysts note, against competitors such as Sheldon Adelson’s Las Vegas Sands and Melco Resorts & Entertainment. Galaxy’s presence also could serve as a deterrent to rivals sizing up a company perceived as more vulnerable by all the turmoil.
Longer-term, though, Galaxy might be a buyer itself, especially of Wynn Resorts assets in Macau. For now, though, it seems that despite lousy cards, Maddox is playing to win.
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