Wynn Issues $800 Million in Bonds to Pay Off Debt, Settle DOJ Dispute
Date: 2024-09-11 Author: Robert Beloved Categories: PAYMENT SOLUTIONS
Last week, the gaming and hospitality giant Wynn Resorts announced a settlement with the DOJ. Under the terms of the agreement, its subsidiary Wynn Las Vegas agreed to pay a record $130 million fine to settle allegations of financial misconduct.
Along with the deal, the company also announced an $800 million 6.250% bond offering due in 2033. The bonds will be offered through Wynn subsidiaries in a private offering. The proceeds could be used to repurchase Wynn Las Vegas’ 5.500% bonds that mature next year and cover related expenses.
The company plans to use some of the proceeds to pay off the DOJ fine
Wynn Resorts also said the remainder of the proceeds could be used for general corporate purposes, including to pay off the record $130 million fine announced on September 6, 2024. This indicates that the company is considering using the proceeds to settle the dispute with the DOJ.
The fine is the largest ever imposed on a casino in U.S. history. As part of the non-chargeable agreement, Wynn Las Vegas admitted to using schemes to circumvent the traditional financial system.
In addition, Wynn confirmed that the bonds will be issued under an exemption from the Securities Act of 1933. This means that the bonds will not be available to the general public and will only be available to qualified institutional investors who meet the requirements of Rule 144A of the Act or international buyers who operate under special rules.
The company said in a statement: "Wynn Resorts Finance plans to use a portion of the proceeds to its subsidiary, Wynn Las Vegas, to fully repay the 5.500% notes due 2025 and cover related expenses. The remainder of the proceeds may be used for corporate purposes, including the payment of the $130 million fine contemplated by the non-chargeable settlement disclosed in our Form 8-K filed with the Securities and Exchange Commission on September 6, 2024."
Using debt financing is common practice
Amid record fine, Wynn Las Vegas confirms tightening of its anti-money laundering policies. The company has been accused of using illegal practices, such as using intermediaries to play on behalf of others.
Despite the size of the fine, which will significantly impact the company's financial position, and the bond offering, Wynn's moves indicate the company is committed to finally settling the dispute.
By comparison, Wynn's rival MGM Resorts also recently increased its bond issue from $675 million to $850 million, planning to use the extra funds for corporate purposes and to pay down existing debt.
