When Wynn Resorts decided to come to Everett, it was Steve Wynn who emerged from Mayor Carlo DeMaria’s office to make the announcement and drive the process forward with memorable charisma.
When Wynn Resorts cuts the ribbon on the Wynn Boston Harbor resort casino in June 2019, Steve Wynn will not be holding the scissors.
The company that, for the last 15 years, has been defined by Steve Wynn no longer has anything to do with Steve Wynn.
Though the Wynn name does still remain a part of the company, Steve Wynn sold off his financial stake in the company late last week, a little over a month since he resigned as CEO of the company.
Wynn Resorts announced on Thursday, March 22, a whirlwind of activity within the company – which is the parent of Wynn Boston Harbor in Everett – that started with the sale of Steve Wynn’s entire holdings within the company he founded and drove to success – a full 12.5 percent of the worldwide company.
Steve Wynn sold 8 million shares (8 percent) to institutional investors who already had a stake in the company. He sold 5.3 million shares to Galaxy Entertainment, a gaming company operating primarily in Macau, China. All shares sold at a price of $175 per share, which is down from the January 2018 share price of more than $200 a share, but up from the low of about $160 per share in February after the sexual misconduct allegation regarding Steve Wynn hit the news cycles and sunk the stock price.
All told, it was a total of $2.1 billion in stock sold, with nearly $1 billion coming from Galaxy – which purchased its shares for $927.5 million.
Wynn Resorts didn’t have any formal statement on the sale of the shares by Steve Wynn, or his exit from the company he founded in 2002.
A Wynn spokesperson did say they are seeing this as a positive move because it has brought in $927 million in new capital to the company, and it has put three very strong entities in place within the stockholders that fully support the current direction of the company under new CEO Matt Maddox’s leadership.
During such a time of transition, they said, that was an important piece that shouldn’t be overlooked. The spokesperson viewed the move as a very strong firm that is now even stronger.
Company officials and Wall Street analysts were looking at the sale as a positive thing, particularly because of those who bought the shares.
In an analysis by JP Morgan’s Asia Pacific Equity Research component, the move by Galaxy was described as strategic, rather than a takeover – which is what many in Everett and Massachusetts have been concerned about. The fact that it came in under 5 percent, the wrote, signaled that they weren’t looking for control.
“To our surprise, Galaxy Entertainment and Wynn Resorts announced that Wynn will sell 5.3 million new shares to Galaxy,” it read.
“Galaxy could’ve potentially bought much more if it wanted and taken meaningful control, but over 5 percent ownership would’ve also triggered the suitability test for Wynn’s US gaming license, for example in Massachusetts,” it read. “In our view, the fact that Galaxy didn’t want to cross 5 percent line indicates this is more of a strategic investment, and not an attempt to take-over or control the company. We don’t expect Galaxy to further increase stake in Wynn for the foreseeable future.”
JP Morgan’s analysis indicated that the deal also promoted stability within the operations, preventing a takeover of the company and ousting the current leadership. It also provides assurance, via Steve Wynn’s exit, that the company’s two lucrative Macau licenses wouldn’t be in jeopardy as a result of the misconduct allegations surrounding Steve Wynn.
Galaxy’s purchase amounted to a 4.9 percent overall stake in the company – just below the threshold for Massachusetts Gaming Commission (MGC) review.
“It is an honor to have such a distinguished company as Galaxy Entertainment as a shareholder which shares many of the same core operating philosophies and values,” said Maddox in a statement after the purchase.
Galaxy Entertainment Group Vice Chairman Francis Lui said, “This is a unique opportunity to acquire an investment in a globally recognized entertainment corporation with exceptionally high-quality assets and a significant development pipeline.”
The MGC said the new purchases by Galaxy and the unnamed institutional investors will be part of the overall investigation that is still ongoing.
“MGC’s investigation into Wynn remains active and ongoing,” read a statement from the MGC this week. “Investigators continue to gather facts and that includes an assessment of the overall corporate response to this serious matter. Shareholding by institutional or individual qualifiers will also be one of the issues considered. Once the investigators conclude their process, the information will be brought before the Commission, who will then determine the appropriate next steps based on the totality of information before them.”
There was no timeline for when that MGC investigation would conclude, though Commissioners have instructed the Investigations Enforcement Bureau (IEB) to be thorough before presenting a final product.
Another key happening that has taken place over the last two weeks, and made public last week was the elimination of litigation that has been ongoing between Universal Entertainment Group and Wynn Resorts.
The Wall Street Journal reported that the settlement to be $2.6 billion, more than the entire construction project of Wynn Boston Harbor.
A second settlement came between the company’s bondholders, the Wall Street Journal reported, regarding the “untangling” of shareholder agreements regarding the sale of Steve Wynn’s sale. Certain agreements could have put bonds in jeopardy for Wynn Las Vegas due to the sale if there had been no agreement.
That settlement came in at $25 million, making the two settlements come in at almost $3 billion in payments.
Wynn officials viewed the payments as eliminating old baggage as CEO Maddox leads the company in a new direction – again iterating that it made a strong company even stronger.
It was also stressed that none of the settlements or activity puts the Wynn Boston Harbor project financing in any sort of jeopardy or limbo.
The financing for the Everett project has been finalized in total quite some time ago and is a completed transaction. It is not a situation where they have financed part of it and have to go back out for the remaining part.
The entire project, they said, was already financed.