BUSINESS | FEBRUARY 19, 2012, 11:43 A.M. ET
Wynn Board Forcibly Buys Out Founder
By ALEXANDRA BERZON And KATE O'KEEFFE
Steve Wynn's gambling empire, dramatically stepping up the battle between the company's two founders, accused Mr. Wynn's former ally of making improper payments and forcibly bought out his 20% stake in the company at a steep discount.
The board of Wynn Resorts Ltd. asked Japanese gambling tycoon Kazuo Okada to resign from the board, saying an internal investigation conducted by a former FBI director found him to be "unsuitable" based on the company's internal regulations.
It bought out his $2.77 billion stake in Wynn, in exchange for a promise to pay Mr. Okada $1.9 billion in 10 years. The payment is a 30% discount to the market value of his stake, not including the cost of the 10-year waiting period. The promissory note pays 2% annual interest.
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Casino companies, which are closely regulated, commonly have provisions in their legal documents to address issues of compliance among shareholders. Wynn's bylaws, written in 2002, state that people found unsuitable to own shares by the board may have to wait 10 years to be paid back at fair value, with 2% interest per year. That language is unusually favorable to the company, legal experts said.
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