Posted on: September 10, 2024, 04:57h.
Last updated on: September 10, 2024, 04:57h.
Wynn Resorts (NASDAQ:WYNN) today announced that it sold $800 million worth of corporate debt in a private offering to redeem bonds maturing in 2025 and to pay a fine of $130.13 million recently levied by the Department of Justice (DOJ).
The newly issued senior notes sport an interest rate of 6.250% and mature in 2033 and are “guaranteed by all of Wynn Resorts Finance’s domestic subsidiaries” except Wynn Resorts Capital.
Wynn Las Vegas, LLC will use the amounts to (i) redeem in full Wynn Las Vegas and Wynn Las Vegas Capital Corp.’s 5.500% Senior Notes due 2025 (the “2025 LV Notes”) and (ii) pay fees and expenses related to the redemption and (b) use the remainder of the net proceeds for general corporate purposes, which may include covering all or a portion of the $130 million forfeiture under the non-prosecution agreement described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 6, 2024,” according to a statement issued by the gaming company.
Last Friday, Wynn disclosed to investors that it reached a $130.13 million settlement with the Justice Department — the largest ever penalty applied to a single domestic casino “based on admissions of criminal wrongdoing,” according to DOJ.
Wynn Bond Sale Implies Swift Payment of DOJ Penalty
While the gaming company didn’t comment on exactly when it will pay the $130.13 million owed to the government, noting that some proceeds from the bond sale could be used for that purpose implies the casino operator could swiftly deal with that obligation.
In an investigation run by the DEA, IRS, and the Department of Homeland Security’s investigative arm, it was discovered that Wynn Las Vegas violated multiple anti-money laundering rules and knowingly allowed some Chinese clients of ill repute to visit and wager at the Strip integrated resort.
In one example highlighted by the DOJ, Wynn Las Vegas permitted a Chinese patron who “had spent six years in prison in China for conducting unauthorized international monetary transactions and violations of other financial laws” to wager at the property.
As part of a non-prosecution agreement (NPA) with the government, Wynn Las Vegas acknowledged wrongdoing and noted that it has extensive measures to bolster its anti-money laundering protocols while telling the government that staffers that were involved in the questionable transactions are no longer employed by the company.
Wynn Bond Sale Serves Another Purpose
While the Wynn bond sale serves the aim of potentially quickly moving the DOJ liability off its books, the transaction is important because it also allows the operator to redeem bonds coming due next year.
Wynn joins rival MGM Resorts International (NYSE:MGM) in recently announcing new debt sales aimed at eliminating issues coming due next year. Prior to those announcements, some analysts noted such transactions weren’t necessary because gaming companies are able to handle the obligations they have coming due in 2025.
In separate though related news, gaming device and lottery giant International Game Technology (NYSE:IGT) said today it’s selling a new euro-denominated bond issue to redeem nearly $500 million in senior secured notes maturing in 2025.
