Galaxy Entertainment Confident of Passing Wynn Deal Probity Checks in Nevada
Posted on: April 1, 2018, 05:00h.
Last updated on: April 1, 2018, 11:56h.
Macau operator Galaxy Entertainment is unconcerned by the Nevada Gaming Commission’s decision to investigate its suitability as an owner of Las Vegas-based casino giant Wynn Resorts.
Galaxy Entertainment bought a 4.9 percent stake in Wynn Resorts for just under $1 billion last week from the divestiture of Steve Wynn’s shares. Usually, only entities owning more than 10 percent of a casino in Nevada are subject to such intense regulatory scrutiny, but the Control Board opted to investigate Galaxy, nevertheless.
In an interview with the Nikkei Asia Review, Deputy Chairman Francis Lui Yiu-tung said he was relaxed about the probe.
“Galaxy is a blue-chip company,” he said. “We are fully transparent. The regulators always have the right to look into things that might interest them. I am not worried at all.”
Galaxy Will Be Passive Investor
Lui revealed that Galaxy Entertainment would not take a seat on the board and, for now, was happy to be a passive investor in the company.
He also said the sudden nature of Wynn’s divestiture meant the company had to act fast to make the billion-dollar decision to invest.
“It was a very quick window for us to make the decision” he told NAR. “We are very lucky. It was a good opportunity to buy into a prestigious company.
“They have great quality assets, they are one of the better-run companies in the world and we are happy that we are able to buy a small part of them.”
Steve Wynn’s status as Wynn Resort’s majority shareholder had become a serious point of concern for the company as a myriad of sexual misconduct allegations began to pile up against him that threatened to jeopardize the company’s licenses.
But a shareholder’s agreement between Wynn and his ex-wife, Elaine Wynn, prevented him from selling his shares.
Galaxy Boosts Chances of Macau License Renewal
A judge in Nevada initially refused to annul the shareholder’s agreement because it was too closely tied up in ongoing litigation between both Wynns and Japan’s Universal Entertainment.
Wynn Resorts was so desperate to safeguard its licenses that it paid Universal $2.4 billion to settle that lawsuit and allow its disgraced former chairman and CEO to sell his shares.
Galaxy’s acquisition of those shares made perfect sense for Wynn Resorts and its shareholders. Macau’s gambling licenses are up for review in 2022 and the tie-up with a local partner reduces the risk of being turned down for a license renewal.
“It is a win-win,” said Lui. “Yes, I think we have given them something they value and I think in return we are investing in a very nice company.”
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