Wynn Resorts Looks To Raise $800M Following Settlement With the DOJ

Article by : Erik Gibbs Sep 12, 2024

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Wynn Resorts has recently announced plans to raise $800 million through a public offering of senior notes, shortly after settling with the US Department of Justice (DOJ) over criminal allegations. The company, based in Las Vegas, filed details of the offering with the US Securities and Exchange Commission (SEC) on September 10. The 6.25% senior notes, due in 2033, are part of Wynn’s effort to strengthen its financial position in the wake of legal challenges.

This move comes on the heels of Wynn’s agreement to pay $130 million to resolve allegations tied to violations of anti-money laundering regulations. The DOJ’s investigation into the company revealed shortcomings in how Wynn handled large cash transactions at its properties and maintained internal controls to prevent illegal money laundering activities. While Wynn cooperated with the investigation, it acknowledged failures in its compliance practices, leading to the hefty settlement.

The new offering is seen as a necessary step for Wynn to stabilize its finances and boost liquidity, especially given the financial hit from the COVID-19 pandemic. Both the Las Vegas and Macau markets, where Wynn has a major presence, were significantly impacted by reduced tourism and gaming revenues. As a result, the company has faced considerable challenges, and its stock has experienced volatility. Wynn’s stock was trading at $77 before the announcement, dropped to $74 shortly after, and later recovered to $75.

The $800 million in senior notes will be available only to investors outside the U.S. and are expected to help fund general corporate purposes. This could include debt repayment and new projects to revitalize Wynn’s operations, as it continues to navigate post-pandemic recovery. Expansion efforts are also part of the plan, with the United Arab Emirates being a new target after Japan shelved initial gaming projects Wynn had been considering.

Despite the resolution of the federal case, analysts and investors remain divided on Wynn’s future prospects. Some see the settlement as a chance to rebuild investor confidence, while others are wary of potential long-term reputational damage. This legal settlement adds to a list of regulatory challenges Wynn has faced, including state-level investigations into its business practices, which have brought heightened scrutiny from regulators.

In response to these challenges, Wynn has been working to improve its compliance and governance structures. The company has introduced new oversight measures and appointed compliance officers to ensure adherence to both federal regulations and best practices within the industry. These efforts are part of Wynn’s broader commitment to restore trust and move forward amid evolving legal and market conditions.