CASINO

Universal shares jump 20% after Wynn amends complaint against Okada

TAGs: aruze usa, Kazuo Okada, Philippines, Steve Wynn, Universal Entertainment, Wynn Resorts

universal-okada-wynnUniversal Entertainment Corp. chairman Kazuo Okada has been summoned to a closed-door meeting with Nevada gaming regulators next week. The topic du jour will be the ongoing brouhaha between Okada and Nevada-licensed casino operator Wynn Resorts. The Las Vegas Review-Journal’s Chris Serioty reported that regulators want to quiz Okada and three other Universal execs – Hajime Tokuda, Kenshi Asano and Hiroyuki Sawada – about allegations of bribery involving former Universal consultant Rodolfo Soriano.

If you’re just joining us, the allegations are that Soriano helped funnel millions of dollars from Universal subsidiaries to former high-ranking political figures in the Philippines. It has been alleged that the payments were intended to help obtain tax and infrastructure concessions for Universal’s Philippine subsidiary Tiger Resorts Leisure and Entertainment, which is developing a casino in Manila’s Entertainment City resort-casino complex. While various branches of Philippine law enforcement are investigating the allegations, the US Federal Bureau of Investigation and Nevada gaming regulators have also opened files on the case, due to the payments having been made through Universal’s US subsidiary Aruze USA.

This is but the latest round in the now year-long fight between Okada and Wynn Resorts. Up until last February, Okada had been Wynn’s largest shareholder, but after he demanded an investigation of Wynn’s decision to ‘donate’ $135m to the University of Macau, his shares were forcibly redeemed at a 30% discount and replaced with a promissory note payable in 10 years. To justify this action, Wynn alleged that Okada had bribed current and former execs at the Philippine Amusement and Gaming Corporation (PAGCOR). Late last month, Okada resigned from Wynn’s board just hours before the board was scheduled to vote him out, but the two parties are far from done squabbling.

On Feb. 13, Okada filed a motion in a Nevada court to force Wynn to put the $1.9b Wynn says it owes Okada for those redeemed shares into an escrow account. The move would put a significant crimp in Wynn’s finances – right when it’s talking about cost overruns on its new Macau development – so it’s not surprising that Wynn ‘intends to oppose the motion vigorously.” A hearing on the matter is set for March 22.

Okada also issued a press release highlighting the fact that on Feb. 27, Wynn Resorts amended its original complaint against him to remove claims that (a) Okada hadn’t told Wynn he was pursuing a Philippine casino project before 2011, and (b) Okada had misappropriated Wynn’s trade secrets. The judge hearing the case had previously expressed doubts about these claims’ validity. Universal stock shot up 20% on the news, its biggest gain since November 2008.

Okada’s release also highlighted the fact that since Wynn launched legal action against him, Okada’s Nevada-based gaming device division Aruze Gaming America has been granted new gaming licenses in 17 jurisdictions in which it had previously not held licenses, including Arkansas, Ontario and 15 US Indian tribes. Okada says that despite Wynn’s efforts “to characterize me as ‘unsuitable’ with baseless accusations … the truth is now beginning to come out.”

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