Casino mogul Steve Wynn may have saved himself some litigation time after Wynn Resorts reached a settlement with Leighton Contractors (Asia) over the disputed Wynn Palace Macau luxury resort project but he sure have lots of explaining to do to his investors
Wynn will shell out US$121 million in fees to pay Leighton Contractors (Asia) while associated companies of the casino operator are expected to pay US$200 million to the construction firm.
In a filing to the Australian Securities Exchange, construction and engineering contractor CIMIC Group Ltd. announced that its subsidiary Leighton and Wynn Resorts amicably resolved their claims and cross claims against each other about the hotel.
It would be recalled that Wynn had earlier accused Leighton of failing to deliver the property on time under a guaranteed price arrangement the sides made.
On the other hand, Leighton claimed that the scope of the project had changed during the course of the work and the extra time and money were needed as a result of the changes.
CIMIC said that Wynn Resorts would make settlement payments to Leighton but the construction company was mum on the amount to be given to the company.
“Wynn Resorts and Leighton Contractors (Asia) agree not to pursue their respective claims and cross-claims including liquidated damages and extensions of time; and Wynn Resorts will meet a regime of settlement payments to Leighton Contractors (Asia),” CIMIC said in the filing.
But in a separate filing before the HongKong Stock Exhange, Wynn announced that Wynn and associated companies will make an additional payment of nearly US$199.8 million to Leighton Asia while another US$121 million as a result of the dispute between the client and contractor under the original Cotai construction agreement.
The amount was broken down into the following: nearly US$21.1 million for work completed and accounted for under the previously arranged maximum guaranteed price for the resort; US$55.2 million that prior to the date of Sunday’s announcement had been withheld under Cotai construction agreement, and up to US$45 million “as and when outstanding, defective, or non-conforming work is completed to the satisfaction of the group.”
These extra payments – with approximately US$120.9 million to be paid today – will push Wynn Palace‘s budget above the US$4.2 billion figure that the group has quoted so far.
“The announcement itself is a bit unclear as to whether this settlement would push the total project budget higher from the previous guidance of US$4.2 billion,” DS Kim, an analyst from international banking and financial services holding company JP Morgan, said. “Given that the guaranteed maximum price has been increased by US$400 million, we think total Palace capital expenditure could turn out to be higher than US$4.2 billion, though there was no announcement on that part yet.”
