Monday, Oct. 7, 2002 | 11:06 a.m.
SUN STAFF AND WIRE REPORTS
If you want a piece of the most expensive casino resort in Las Vegas history, it will cost you $21 to $23 per share.
That's according to gambling executive Steve Wynn, who today updated his plan to go to Wall Street to raise as much as $470 million in an initial public offering to finance his $2.4 billion, 2,700-room Le Reve resort on the Las Vegas Strip.
Wynn Resorts Ltd., a casino holding company founded by Wynn, also disclosed plans today to break ground this month on the resort at the site of Wynn's Desert Inn hotel.
The Las Vegas-based company plans to sell about a third of its equity, or 20.5 million shares, at $21 to $23 apiece, according to an IPO filing with the Securities and Exchange Commission. The sale is scheduled for the week of Oct. 21, people familiar with the transaction told Bloomberg News.
Wynn is also selling $340 million of second mortgage notes and arranging as much as $1.19 billion of bank credit.
The casino IPO would come at a time that companies are going public at the slowest pace in 25 years. U.S. companies haven't had an IPO since LeapFrog Enterprises Inc. raised $117 million on July 24, and just six completed IPOs in the third quarter.
Coast Casinos Inc., operator of locals'-oriented hotel-casinos in Las Vegas like the Orleans and Suncoast, has delayed plans for an IPO of as much as $200 million because of the soft market.
Wynn's casino resort, which will include an 18-hole golf course, is scheduled to open in April 2005.
Wynn, 60, had been chairman of Mirage Resorts Inc. until the company was bought by MGM Grand Inc. for $6.4 billion in March 2000. At Mirage, the casino tycoon developed the Bellagio, Mirage and Treasure Island casino resorts in Las Vegas and the Beau Rivage hotel-casino in Biloxi, Miss.
Wynn's IPO, originally anticipated last month, has drawn mixed reactions from industry observers and analysts. Some see Wynn as the top resort developer in the world and point to his successes in developing the highly profitable Bellagio and Mirage properties.
Others say Wynn is following a pattern that brought considerable criticism from Wall Street while he was running Mirage, where critics said he spent too much on Bellagio, limited the flow of financial information to Wall Street and packed his board of directors with cronies who were beholden to Wynn instead of public shareholders.
With Le Reve, Wynn will be competing with huge but less expensive competitors including Bellagio ($1.6 billion) and the Venetian ($1.2 billion).
As he develops Le Reve, Wynn will also be developing a casino on the Chinese island of Macau. He and Venetian owner Sheldon Adelson were chosen by the Macau government this year to bring Las Vegas-style resorts to the city's gambling industry, which has been operating as a monopoly controlled by casino magnate Stanley Ho.
A Wall Street analyst was bullish on the offering today.
Casino stocks are among few sectors that are holding up relative to the broader market, Prudential Securities analyst William Lerner told the Las Vegas Sun.
That, along with the fact that many investors believe the smart money is on Wynn, will pave the way for a "warm reception" on Wall Street, he said.
Dennis Forst, an analyst with McDonald Investments, said Wynn has a "small window of opportunity."
"A lot depends on price," he said. "I don't know whether he will be willing to give up enough equity to get sufficient capital."
"He has a great reputation and name, but the valuations obviously are depressed because of the overall market and the (lack of) appetite for new shares," he added.
Deutsche Bank AG, Bear Stearns Co., and Bank of America Corp. are managing Wynn Resorts' IPO. The company's shares are to trade on the Nasdaq Stock Market under the ticker WYNN.
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