Wynn Resorts seeks to buy out Macau partners

By Liz Benston (contact)

Thursday, Sept. 2, 2004 | 10:32 a.m.

Wynn Resorts Ltd. is issuing about 1.3 million shares to buy out the company's minority partners in a Macau casino development subsidiary.

In a filing with the Securities and Exchange Commission Wednesday, Wynn Resorts said it would buy out minority partners who hold the remaining 17.5 percent interest in Wynn Macau. Instead of a direct stake in the Macau resort, the minority partners would own a piece of the parent company.

Wynn Resorts, controlled by casino developer Steve Wynn, will then receive 100 percent of the profit generated by the Macau subsidiary, which is developing a $700 million resort in the Chinese province.

Fulcrum Global Partners analyst Joe Greff said the transaction is a windfall for Wynn Resorts because it gives the company full ownership of the subsidiary at relatively low cost.

Greff estimated that the deal is worth an extra $1 to the company's share price.

The Macau government in 2002 broke casino boss Stanley Ho's casino monopoly on the island by granting casino licenses to foreign investors including Wynn and Venetian resort owner Sheldon Adelson. The agreements require the companies to develop Macau casinos with local partners.

According to the company's concession agreement with the Macau government, Wynn Macau is required to have an executive director who is a Macau resident "and holds at least 10 percent of the voting shares and capital in Wynn Macau."

Macau businessman Wong Chi Seng will retain voting rights on 10 percent of Wynn Macau shares after the sale, the company said.

Wynn Resorts representatives declined to comment on the filing or explain why the company is buying out its minority partners.

Greff said the Macau government only requires that Macau partners have a voting interest, not a monetary interest, in the foreign casino projects.

"They invested about $5 million and now they're getting about $52 million," he said of the sale to the minority partners. "It's a good deal for them and it's also a good deal for Wynn."

The transaction has come after lengthy discussions with the partners, who probably weren't interested in investing more equity in the company over time, Greff said.

Wynn Resorts has about 89.2 million shares outstanding. Shares were up about $1 per share or 2.6 percent in early trading today, to $39.77.