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Universal rejects Steve Wynn claims that Stockholders Agreement no longer binding

Wednesday, 21 February 2018 05:38
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Japan’s Universal Entertainment Group has rejected an assertion by former Wynn Resorts Chairman and CEO Steve Wynn that a 2010 Stockholders Agreement between Mr Wynn, ex-wife Elaine Wynn and Universal subsidiary Aruze USA “no longer binds either party.”

The Wynn Resorts founder made the statement last week after agreeing to relinquish control of Ms Wynn’s 9.4% stake in the company in the wake of recent sexual harassment allegations that saw him step down from the board.

Outlining details of ongoing court proceedings between the three parties, Universal said, “Aruze USA firmly believes that Mr Wynn and Ms Wynn are still bound by the Stockholders Agreement and that Aruze USA has rights pursuant to the Stockholders Agreement with respect to potential stock sales by Mr or Ms Wynn.

“Specifically, neither Mr Wynn nor Ms Wynn can sell their respective shares in Wynn Resorts without the required approval of Aruze USA under the terms of the Stockholders Agreement or until Aruze USA’s claims in this case are resolved.”

The original 2010 Stockholders Agreement gave Mr Wynn control over the trio’s shares with the aim of warding off any potential takeover bids, but he has since agreed to relinquish control of his ex-wife’s stake.

In a letter to filed with the US Securities and Exchange Commission by Wynn Resorts on 9 February, Mr Wynn’s legal team said, “In light of the significant changed circumstances triggered by Mr Wynn’s resignation, this letter hereby constitutes formal notice that Mr Wynn no longer contests Ms Wynn’s judicial admission that the 2010 Stockholders Agreement is invalid and unenforceable.

“Accordingly, while Mr Wynn does not agree with Ms Wynn’s bases for claiming the 2010 Stockholders Agreement is now invalid and unenforceable, he does agree that it no longer binds either party. As such, it is Mr Wynn’s position that there is no longer a live controversy between the parties on this issue.”

Universal has rejected such a notion and revealed over the Chinese New Year holiday that it has since sent a letter of its own to Steve Wynn, Elaine Wynn and Wynn Resorts reminding them that the Stockholders Agreement “is a three party agreement among them and Aruze USA, Inc, and that Aruze USA has numerous pending claims in this case which assert that the Stockholders Agreement is valid and enforceable.

“Consequently, Mr Wynn’s statements that now, in his view, the Stockholders Agreement is not enforceable against Ms Wynn, do not resolve in any way Aruze USA’s claims that the Stockholders Agreement is valid and enforceable,” it added.

Aruze USA and its former Chairman Kazuo Okada, himself sacked by Universal last year following allegations of fraud against the company, are due to face off in court on 16 April against the Wynns and Wynn Resorts over the forced redemption of shares worth almost US$2.8 billion in 2012. The shares were redeemed and Okada removed from the Wynn Resorts board after the company claimed Okada had put Wynn’s gaming license in jeopardy amid allegations he provided improper hospitality at Wynn properties to Philippine gaming officials to the tune of US$110,000.

Referencing the upcoming court case in its statement, Universal said the company “is claiming that the redemption in February 2012 of Aruze USA’s shares was invalid and improper. Our expert report in this case sets forth that we are entitled to approximately US$4.5 billion in damages for the invalid redemption as of October 31, 2017.”

 

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