Universal Entertainment Corp., headed by Japanese billionaire Kazuo Okada, and its unit Aruze USA Inc. have filed a counterclaim against Wynn Resorts Ltd (WYNN: Quote) and its CEO Steve Wynn to prevent redemption of Wynn Resorts shares owned by Aruze USA at a 30 percent discount.
Responding to the counterclaim, Wynn resorts said that, "Despite its enormous length and scurrilous allegations, the Okada response fails to contain any meaningful denial of the facts detailed in the Freeh Report or Gov. Miller's conference call on Feb. 21, 2012."
Kazuo Okada is the largest shareholder in Wynn Resorts with a 20 percent stake. He was ousted as a director after he was claimed to be unsuitable to continue in the board. Wynn Resorts redeemed Okada's 20 percent stake after an internal investigation revealed that Okada had violated U.S. anti-corruption laws.
In the court filing on Monday, Okada sought permanent injunction, relief and multiple claims for damages against Steve Wynn, a member of the board.
In the counterclaim filed at District Court for Nevada, Okada said that no redemption of shares has occurred and that there is no legal basis for it. He also denied the board's finding that he is "unsuitable" to continue as a member.
The counterclaim states that Steve Wynn has run Wynn Resorts as a personal fiefdom, fielding its Board with friends and doling out huge sums to key staff so that he can control the company. It also charged Steve Wynn of indulging in fraud and defamation.
The counterclaim also said the report by Freeh Sporkin & Sullivan LLP, a law firm hired by Wynn Resorts to investigate Okada, is just a ruse to redeem shares at heavy discount.
Okada said that while Wynn's compliance committee and an investigative report have pointed the finger at Okada's Philippines project, they have not focused on Wynn's own operations in Macau.
Ties between Okada and Steve Wynn soured after Okada filed a writ in January asking to see financial documents relating to a $135 million company donation to the University of Macau.
Wynn Resorts last February said a detailed investigation had uncovered violations of U.S. anti-corruption laws by Kazuo Okada and companies related to him. Wynn said its board asked Okada to resign as director and that it had redeemed Okada's 20 percent stake.
Wynn Resorts filed a lawsuit against Okada, Aruze USA, Inc. and Universal Entertainment Corporation in Nevada District Court, Clark County for breach of fiduciary duty and related offenses.
Pursuant to the finding of "unsuitability", the Board had redeemed Aruze USA Inc.'s 24 million Wynn Resorts' shares, at "fair value", which amounted to a 20 percent stake. Wynn had issued a 10-year $1.9 billion promissory note in redemption of the shares.
WYNN is trading at $125.55, up $4.48 or 3.70%, on a volume of 1.7 million shares on the Nasdaq.
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by RTT Staff Writer
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