Las Vegas Sun

March 28, 2024

Wynn announces 2-for-1 stock split

ONE of gaming's most-accomplished artists painted a vibrant portrait of Mirage Resorts Inc.'s future.

Mirage Chairman Steve Wynn, at the annual shareholders meeting Thursday, vowed to double the size of the company, already one of the industry's largest, and complete construction of Bellagio, "the world's greatest hotel," in the next 40 months.

And he delighted more than 1,000 shareholders assembled in the Siegfried & Roy Theater at The Mirage with his announcement of a 2-for-1 stock split designed to widen the stockholder base by making shares more affordable to individual investors.

Wynn noted that Mirage stock has climbed 130 percent in the past year and said further growth is planned in the country's most dynamic gaming venues.

"We know where the opportunities of the future lie -- in Las Vegas, Atlantic City and Mississippi," he said. "We know what we're getting into and how to do it. We like mature gaming markets where we can capture a significant share of the market with a superior product."

One such project is Bellagio, the $1.25 billion, 3,000-room resort that Wynn said would be "the most beautiful hotel in the world." It's being built at the site of the former Dunes hotel-casino on the corner of the Strip and Flamingo Avenue.

"We've all made big promises," he said, gesturing toward the Mirage executives flanking him at the meeting, "and we mean to keep them. We are going to build the greatest hotel ever built in the history of the world."

He described Bellagio's evolution as a painstaking process of creation and elimination that stretches over 28 months of design and planning alone. By contrast, The Mirage design-and-development process took 10 months.

"We realized that it was our time and our place (to build Bellagio), but that there was no need to rush the project. We wanted to get it right," he said.

"Bellagio will cost $1.25 billion, excluding the land," he said. "Compare that with The Mirage, which cost $620 million and has the same number of rooms.

"We wrestled with so many questions about what to do, including building something similar to The Mirage. But we concluded that if we could build something so pre-emptive, so much better than anything else in the world, we could make Las Vegas grow just as The Mirage did when it opened, giving this city an added appeal that it doesn't have today."

Wynn said the project required successful experience in operating premiere resort complexes, "and we fit the bill.

"We also knew we'd need a lot of capital and it had to be relatively inexpensive, because you can't do something like this at 12 to 14 percent interest rates." The company's strong balance sheet and high credit rating enable it to pay lower rates on debt financing.

"And it had to be built in the greatest destination city in the world, a city that offered sufficient space for a project of this magnitude. Hong Kong, Paris, London, New York -- great cities, but none qualified."

To complement the design of the hotel, he said, Bellagio will offer gourmet restaurants and elegant shopping areas boasting Armani, Hermes, Chanel, Tiffany and Gucci labels. A $30 million light-and-water show on a lake in front of the hotel is being developed by a former Disneyworld designer "who assured me this will be the project of his life," Wynn said.

Wynn's enthusiasm over Bellagio, which will open in early 1998 and employ 8,000, was almost equaled by his description of Mirage projects elsewhere.

"We think the Atlantic City market is almost like a brand-new one. The regulatory environment has improved, the tax structure is fair and the government understands our business.

"The market hasn't reached critical mass yet, which makes for wonderful opportunities. We control about 175 acres of land there -- the largest gaming-zoned tract in the city and bigger than all other casino projects combined.

"We asked what would be the best way to develop it. We're going to build a 2,500-room hotel on that site and we wanted companies we respect to join us and build around us," he said.

"We asked Circus Circus, and I suspect they'll be announcing plans for a 2,000-room hotel soon. We asked the Boyd Group, and I think they're going to build a 1,500-room hotel on the other side of us. I think before long, you'll see 7,000 to 9,000 rooms on that site."

Circus Circus Enterprises is Mirage's joint venture partner in Monte Carlo, which will open June 21 with more than 3,000 rooms on the Las Vegas Strip.

"It'll be the fanciest economy priced hotel in Las Vegas, with a great showroom, elegant casino and excellent values. And the people from Circus who'll be running it are excellent operators."

Wynn said he expects Mirage to net $25 million to $40 million a year from Monte Carlo, about equal to the company's cash contribution to the venture.

The $500 million Beau Rivage hotel-casino the company is building on the Gulf Coast in Biloxi, Miss., will add 1,800 rooms to Mirage's new openings over the next two years.

"Within the next 40 months, we're going to grow from our current inventory of 8,300 rooms to 16,800," Wynn said. "We've never been in a stronger financial position or had more opportunities."

Much of that growth will be financed by the company's operating cash flow and an existing $1 billion bank credit facility.

The stock split, payable July 1 to holders of record June 17, will raise the number of common shares outstanding to 193.6 million. It should result in a share price of around $27, assuming the market remains steady until the record date. The stock is currently trading around $54.

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