As the COVID-19 pandemic has now hit Wynn Resorts in three locations – Everett, Las Vegas and China – the company announced a private offering on Tuesday to raise $350 million in capital as uncertainty now and in the future unfolds.
On Tuesday, the company announced a private offering of $350 million in senior notes that would be due in 2025, saying they would use the net proceeds from the offering for general corporate purposes and to pay related fees and expenses. Already, the company has said it would pay employees, full and part-time, their regular wages through May 15.
That comes also as uncertainty worldwide in their product is on the horizon – something the company detailed in a filing Tuesday with the federal Securities and Exchange Commission (SEC).
“The COVID-19 outbreak has significantly increased economic and demand uncertainty,” read the filing. “The current outbreak and continued spread of COVID-19 could cause a global recession, which would have a further adverse impact on our financial condition and operations. Current economic forecasts for significant increases in unemployment in the U.S. and other regions due to the adoption of social distancing and other policies to slow the spread of the virus is likely to have a negative impact on demand for casino resorts once our operations resume, and these impacts could exist for an extensive period of time.
“The extent of the effects of the outbreak on our business and the casino resort industry at large is highly uncertain and will ultimately depend on future developments, including, but not limited to, the duration and severity of the outbreak, the length of time it takes for demand and pricing to return and normal economic and operating conditions to resume,” continued the narrative.
Another key part in the form related to the high level of debt that Wynn Resorts carries for projects like Encore Boston Harbor, a new resort in Macau from 2017, and other major projects in Las Vegas – as well as the settling of very expensive, ongoing litigation in early 2019.
The company detailed that capital markets may not be available in the months to come, and perhaps more certainly not in the terms they would find acceptable. Were they not to make the offering now, they seemed to indicate in the future they may not be able to pay their debts.
“To the extent COVID-19 adversely affects our business, operations, financial condition and operating results, it may also have the effect of heightening many of the other risks related to our business, including, but not limited to, those relating to our high level of indebtedness, our need to generate sufficient cash flows to service our indebtedness, and our ability to comply with the covenants contained in the agreements that govern our indebtedness,” read the filing.
Few companies have been hit as hard and as frequently by the pandemic as Wynn Resorts. In February, their Macau operations were closed for 15 days at a cost of about $2.5 million per day. Even though gaming operations in Macau on March 20, visitation to the island gaming mecca is extremely limited. Many residents of China, Hong Kong and Taiwan have extreme limitations put on their entry into Macau and anyone not a citizen of Greater China (meaning most of the world) cannot travel to Macau still.
Of course, Encore Boston Harbor closed operations on March 15, and Las Vegas closed its casinos on March 17. Both are still closed until April 30 in Vegas and May 4 in Everett, and the company estimated it is costing $3.5 million per day to keep those operations going.
Already, on March 25, the company announced that the Board of Directors and top executives – including CEO Matt Maddox – would defer pay this year in exchange for stock in the company. Maddox agreed to defer all of his cash wages for the entire year, while others agreed to forgo between 33 percent and higher of their wages.
Those move were meant to offset ongoing employee and payroll expenses at the properties.
•In other news, the Massachusetts Gaming Commission (MGC) voted unanimously in a teleconference meeting to continue the closure of all of its gaming licensees – including Encore Boston Harbor – until May 4. They agreed that it was important to be consistent with Gov. Charlie Baker’s dictate about keeping non-essential businesses closed until May 4. The MGC agreed to convene in a meeting prior to May 4 to re-assess the conditions within the state.