Steve Wynn Gets Dismissal of Suit Over Macau Donation
By Linda Sandler - Feb 4, 2013 11:03 AM ET
Billionaire Steve Wynn and other directors of Wynn Resorts Ltd. (WYNN) won dismissal of a shareholder lawsuit alleging a donation in Macau breached fiduciary duties and wasted company assets.
The investors, including a Louisiana police retirement fund, have permission to amend the complaint, U.S. District Judge James Mahan in Nevada said in a filing on Feb. 1.
Wynn Resorts Ltd. logos are illuminated at the Wynn Macau casino resort in Macau, China. Photographer: Jerome Favre/Bloomberg
“Plaintiffs’ complaint fails to sufficiently allege that defendants knew that the Macau donation was improper,” the judge said in his ruling. Lawsuits that fail to demonstrate that their allegations are “plausible,” as opposed to being “conceivable,” must be dismissed, he said.
In May 2011, Chairman Steve Wynn and almost all of Wynn Resorts’ board approved a $135 million donation to the University of Macau’s Development Foundation. The Las Vegas- based casino operator is expanding in the Chinese city, the world’s largest gambling hub.
Wynn Resorts Director Kazuo Okada didn’t approve the donation. The casino operator last year forcibly redeemed Okada’s 20 percent stake in the company for a $1.9 billion promissory note payable in 10 years, saying improper payments to Philippine gaming regulators made him unsuitable.
Okada, the chairman of Universal Entertainment Corp. (6425), is fighting the redemption and demanding an investigation into Wynn Resorts’ use of corporate funds.
According to the complaint, filed in March, approval of the Macau donation breached fiduciary duties and wasted assets because it resulted in “the cost of defending Wynn Resorts against government investigations and the potential penalties, fines and other liabilities and expenses associated with those investigations,” Mahan said in his ruling.
The investors also claimed that the replacement of Okada’s equity stake lacked a valid corporate purpose and wasted assets by saddling the company with the $1.9 billion note.
Last week, Wynn Resorts reported lower-than-forecast fourth-quarter profit as Macau business fell.
The casino company today said it was “deeply gratified” by the dismissal of the shareholders’ suit and accused Okada of pursuing a “smear campaign” against Wynn and the company. The company has asked shareholders to vote Okada off its board at a special Feb. 22 meeting.
The Nevada Gaming Control Board concluded its own probe into the Macau donation and “determined that Okada’s allegations are unfounded,” Wynn Resorts said in today’s statement.
The case is Louisiana Municipal Employees’ Retirement System v. Wynn, 2:12-cv-00509, U.S. District Court, District of Nevada (Las Vegas).
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