Published on: September 10, 2024, 04:57h.
Last edited on: September 10, 2024, 04:57h.
Wynn Resorts (NASDAQ:WYNN) recently declared the sale of $800 million in corporate debt in a private offering to repay bonds expiring in 2025 and to settle a $130.13 million fine imposed by the Department of Justice (DOJ).
The newly released senior notes carry an interest rate of 6.250% and will mature in 2033. They are “guaranteed by all of Wynn Resorts Finance’s domestic subsidiaries” except Wynn Resorts Capital.
Wynn Las Vegas, LLC plans to (i) fully redeem Wynn Las Vegas and Wynn Las Vegas Capital Corp.’s 5.500% Senior Notes due 2025 (the “2025 LV Notes”) and (ii) cover the fees and expenses related to the redemption, and (b) utilize the remaining net proceeds for general corporate purposes, which may entail covering all or a portion of the $130 million forfeiture under the non-prosecution agreement outlined in our Current Report on Form 8-K submitted to the Securities and Exchange Commission on September 6, 2024,” as stated by the gaming company.
On the previous Friday, Wynn informed investors about the $130.13 million settlement with the Justice Department — the largest penalty ever imposed on a single domestic casino “based on acknowledgments of criminal misconduct,” the DOJ reported.
Wynn’s Debt Sale Indicates Prompt Settlement of DOJ Fine
Although the gaming company did not specify when it will pay the $130.13 million owed to the government, mentioning that some of the bond sale proceeds could be used for that purpose suggests that the casino operator may quickly address this obligation.
An investigation conducted by the DEA, IRS, and the Department of Homeland Security’s investigative division revealed that Wynn Las Vegas contravened numerous anti-money laundering regulations and knowingly permitted some disreputable Chinese clients to visit and gamble at the Strip integrated resort.
As highlighted by the DOJ, Wynn Las Vegas allowed a Chinese customer who “had served six years in prison in China for orchestrating unauthorized international monetary transactions and violating other financial laws” to gamble at the establishment.
As part of a non-prosecution agreement (NPA) with the government, Wynn Las Vegas admitted wrongdoing and stated that it has implemented extensive measures to enhance its anti-money laundering procedures while disclosing to the government that employees involved in the questionable transactions are no longer part of the company.
Wynn’s Debt Sale Serves Another Objective
In addition to potentially expeditiously eliminating the DOJ liability from its balance sheet, the Wynn bond sale is significant because it also allows the company to redeem bonds that are due next year.
Wynn follows rival MGM Resorts International (NYSE:MGM) in recently announcing new debt offerings aimed at resolving upcoming obligations. Prior to these announcements, some analysts remarked that such transactions were unnecessary because gaming companies could handle the obligations due in 2025.
In related news, gaming equipment and lottery company International Game Technology (NYSE:IGT) revealed today that it is issuing a new euro-denominated bond offering to redeem almost $500 million in senior secured notes expiring in 2025.