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game Vincent Martinez  

SEC filing sheds light on Wynn Resorts’ developments

Steve Wynn’s new company is taking shape, with former Gov. Bob Miller and Wynn’s wife, Elaine, agreeing to join the Wynn Resorts board of directors, the company revealed in a Tuesday Securities and Exchange Commission filing.

 

Wynn’s plans to develop Le Reve, a $1.83 billion megaresort on the Desert Inn site, and casino resorts in Macau became a bit clearer Tuesday as Wynn Resorts further detailed its plans to sell stock to the public.

 

Wynn Resorts advised investors in its filing that it expects to raise additional financing in the form of a $350 million second mortgage and about $363.5 million from its planned public stock offering, which Wall Street sources expect to take place in early- to mid-September.

 

Construction of Le Reve is slated to begin next month with the megaresort’s opening scheduled for March 2005. Wynn Resorts expects the planned megaresort to employ about 8,000 workers.

 

The planned resort will be the first Strip megaresort to open since the bankrupt Aladdin opened in August 2000.

 

Le Reve will be “the most luxurious hotel resort environment on the Las Vegas Strip,” the filing noted. “At the time of Le Reve’s planned opening in March 2005, we believe that it will have been almost five years since a major new hotel casino resort opened on the Las Vegas Strip. As a result, we expect that there will be a high level of anticipation for Le Reve. We intend to capitalize on this high level of anticipation, as well as the tendency of customers in the Las Vegas market to gravitate toward new attractions and locations.”

 

The filing reveals Wynn’s plans to recapture some of the high-end UFABet gamblers Strip heavyweight MGM Mirage garnered when it acquired Wynn’s former company, Mirage Resorts, in May 2000.

 

“We believe that Le Reve will attract wealthy international and domestic gaming customers due in part to the high degree of customer recognition and guest loyalty that we believe Mr. Wynn has developed over the last two decades by operating some of the signature properties on the Las Vegas Strip,” the filing noted.

 

In addition to serving as the company’s chief executive officer, Wynn will serve as chairman of Wynn Resorts’ board. Kazuo Okada, whose Japanese company Aruze Corp. has an ownership stake in Wynn Resorts equal to Wynn’s, will serve as vice chairman.

 

Okada, through Aruze, and Wynn each control 47.4 percent of Wynn Resorts stock before the public offering. No price has been set for the shares slated to be sold through the offering.

 

Former Wall Street financial analyst Ron Kramer is credited with arranging the resort’s financing package; Kramer will serve as Wynn Resorts’ president. Kramer didn’t return Tuesday phone messages.

 

Wynn’s annual salary will be $1.25 million before bonuses and stock grants; Kramer’s one-year contract calls for a $1 million salary and a $1.25 million bonus.

 

Aside from Miller and Elaine Wynn, other outside directors include Zenith National Insurance Corp. Chairman Stanley Zax and Republican fund-raising official John A. Moran, finance chairman of Bob Dole’s 1996 presidential bid.

 

Miller and Zax did not return Tuesday phone calls. Wynn employees cited commission rules preventing Wynn and others from commenting on the filing.

 

The planned public offering in Wynn Resorts stock, set to be sold under the symbol “WYNN” on the Nasdaq Stock Market, is intended to raise capital to fund Le Reve construction.

 

In addition to the $363.5 million raised from the public stock offering, Wynn Resorts would also borrow up to $1 billion from its underwriters: Deutsche Bank Securities; Bear, Stearns & Co.; and Banc of America Securities will lead Le Reve’s financing consortium.

 

Wynn Resorts doesn’t expect to begin borrowing the investment bankers’ money until late 2003.

 

The $1 billion includes a $750 million revolving loan and a $250 million secondary revolving loan.

 

Other financing would come from a $350 million second mortgage and a $150 million loan on furniture, fixtures and equipment. Terms of the FFE loan have yet to be finalized.

 

The company’s filing noted the financing’s impact on Wynn Resorts: “We are highly leveraged and future cash flow may not be sufficient for our subsidiaries to meet their obligations, and we might have difficulty obtaining more financing.”

 

Marnell Corrao Associates will be Le Reve’s builder and general contractor. The company built Bellagio, Treasure Island and The Mirage for Wynn, and also built New York-New York.

 

Wynn Resorts estimates Le Reve’s design and construction costs at $1.4 billion, with a $2.4 billion total development cost. Wall Street analysts set the planned resort’s price tag at $1.83 billion.