Stay informed with the
NEW Casino City Times newsletter!
Best of Chris Sieroty
Report: Wynn Cotai deal sealed20 April 2012
Macaubusiness.com cited the Journal Tribuna de Macau, which attributed the report to a source with knowledge of the multibillion- dollar deal.
Michael Weaver, senior vice president of marketing strategy for Wynn Resorts in Las Vegas, declined to comment.
"We do not comment on actions by the Macau regulatory authorities until such actions happen," Weaver said.
Shares of Wynn Resorts gained $5.51, or 4.42 percent, to close at $130.28 on the Nasdaq Global Select Market. Wynn Resorts shares rose as much as 6.2 percent, to $132.47, in early morning trading Wednesday, their biggest jump since March 2.
"If this is accurate, this should be viewed very favorably by investors since it plugs a unit growth/new development hole," Joe Greff, a J.P. Morgan Chase & Co. analyst, wrote in a research note Wednesday.
Greff, who rates Wynn Resorts "overweight," said the deal could add as much as $30 a share to the gaming company.
Nomura analyst Harry Curtis was skeptical of the report. He said in a research report Wednesday that he was taking a "conservative" approach because the news didn't come from an official government source.
But Curtis rated Wynn Resorts "buy" and attributed $16 a share to the deal.
He said resolution of an continuing legal dispute between Steve Wynn, with the company's co-founder, and its former largest shareholder, Kazuo Okada, could also boost the share price.
The dispute is related to Okada's claim that Wynn Resorts' $135 million donation to the University of Macau Development Foundation was improper, and the gaming company's report that alleges Okada violated the U.S. Foreign Corrupt Practices Act by bribing gaming regulators in the Philippines.
Wynn Resorts announced in September that its subsidiary, Wynn Macau Ltd., had accepted the draft terms of the government land contract and has been waiting for the Macau government publication of the land gazette before it can start construction in Cotai, an emerging resort area of Macau.
Under the contract, Wynn Macau will lease the land from the Macau government for 25 years, with renewal rights. The company paid $193.4 million, must pay Macau $771,738 a year in rent during the development phase and annual rent of $1.08 million when the development is completed, according to Wynn Macau.
Wynn already has two resorts in Macau, which generated $765 million in operating income last year. Greff said Wynn Cotai is expected to cost $3 billion. Featuring about 2,000 hotel rooms and 400 gaming tables, it is "likely to open in 2015, perhaps 2016," he said.
Analysts surveyed by Yahoo Finance expect Wynn Resorts to post first-quarter earnings of $1.41 a share on revenue of $1.34 billion.
Copyright GamingWire. All rights reserved.
Best of Chris Sieroty