Okada asks court to restore his Wynn shares

AP Photo/Nevada Appeal, Cathleen Allison

Las Vegas casino mogul Steve Wynn, right, talks with Kazuo Okada during a Gaming Commission hearing Thursday, June 17, 2004, in Carson City, where Okada received approval for a license for his Japanese Aruze Corporation to manufacture and sell slot machines in Nevada.

The 6-month-old legal dispute between Wynn Resorts Ltd. board member Kazuo Okada and the rest of the Wynn board is heating up, with Okada asking a court Thursday to restore him as the largest Wynn shareholder.

In February, hotel-casino operator Wynn Resorts unilaterally redeemed Okada’s $2.7 billion stock position at a steep discount, exchanging it for a $1.9 billion note maturing in 2022 and earning 2 percent interest.

A majority of the Wynn Resorts board also said it planned to ask stockholders to remove Okada, a Japanese gambling magnate, from the board. Wynn Resorts said the moves were necessary to protect its gaming licenses after it learned Okada had been providing benefits to Filipino gaming regulators at a time he was seeking a casino license in the Philippines.

These actions came after Okada filed suit in January to gain access to Wynn books and records related to Wynn’s pledge to donate $135 million to the University of Macau.

Okada has suggested this donation was improper given Wynn’s status as a casino licensee in Macau, a Chinese gambling territory.

Both sides now face scrutiny for their compliance with the U.S. Foreign Corrupt Practices Act, a law aimed at deterring U.S. firms from paying bribes to foreign officials.

Both sides have denied wrongdoing.

In the latest escalation of the legal battle Thursday, Okada’s legal team filed a beefed-up counterclaim against Wynn Resorts and its board in an existing lawsuit in U.S. District Court for Nevada.

They also filed a motion seeking an injunction blocking Wynn Resorts from depriving Okada’s company Aruze USA of any of its rights as a shareholder, ''absent a final determination on the merits of the case.''

''This relief is necessary because the Wynn Resorts Board of Directors purports to have forcibly redeemed Aruze USA’s almost 20 percent ownership interest in Wynn Resorts, seeking to disenfranchise Aruze USA with respect to critical upcoming stockholder votes and to silence Kazuo Okada as the lone voice of dissent against Steve Wynn on the board,'' Okada’s filing said.

In the injunction motion, Okada attorneys said it didn’t make sense for Wynn to convert Okada’s shares to debt to protect Wynn gaming licenses.

That's because in Nevada, where Wynn has the Wynn and Encore resort complex on the Las Vegas Strip, an unsuitable person or entity is precluded from holding both stock and debt in a gaming company, they said.

Calling the forced redemption a ''pretext,'' the attorneys wrote in their filing: ''The board’s resolution to exchange Aruze USA’s stock for a 10-year note utterly fails to solve the supposed 'suitability' problem purportedly underlying its decision to act.''

Wynn attorneys have not yet responded to this motion and it’s not known when the court will act on it.

The motion appears to be timed to gain a resolution of Okada’s standing as a shareholder so that if he wins the motion, he can vote his shares at a special stockholder meeting that has yet to be scheduled in which Wynn CEO Steve Wynn and the board members allied with him will try to remove Okada from the board.

Okada also wants to vote his shares at Wynn’s annual meeting.

Wynn must hold its annual stockholder meeting no later than Nov. 17, according to Okada attorneys.

''If the stockholder meeting is allowed to proceed without recognizing Aruze USA’s rights as a stockholder, no post-decision relief will be adequate to compensate Aruze USA for its inability to vote (including votes for election of directors), notice stockholder proposals, wage a proxy contest, or nominate its own directors in connection with the meeting,'' Okada attorneys wrote in Thursday’s filing.

Legal

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