Tuesday, Oct. 22, 2002 | 11:15 a.m.
Wynn Resorts Ltd., which plans to build the $2.4 billion Le Reve resort on the Las Vegas Strip, is lowering the price of its stock in its initial public offering.
In a revised registration statement filed with the Securities and Exchange Commission, the company, headed by casino mogul Steve Wynn, said Monday it would offer more shares at a lower price to raise the same amount of cash, part of a complex financing package that also includes bids to sell high-risk bonds.
Instead of offering 20.45 million shares at $21 to $23 a share, Wynn plans to sell 23.68 million shares at $18 to $20 each, the filing said. Underwriters Deutsche Banc Securities said they hope to price the issue after the close of the stock market today with initial trading expected on the Nasdaq Stock Market beginning Wednesday. The ticker symbol would be WYNN.
The IPO under the new price is expected to raise between $426 million and $474 million compared with $430 million to $470 million under the previous plan.
An amended registration statement filed with the SEC today said increasing the number of shares would dilute the ownership role of Steve Wynn and his business partner, Kazuo Okada, the head of Aruze Corp., a Japanese gaming equipment manufacturer.
Under the revision, each partner's 19 million shares would represent 29.8 percent ownership of the company.
All directors and executives as a group would hold a total of 59.7 percent of the stock after the IPO.
Previously, the two partners each would have held 31.4 percent of the holdings.
Funding of the IPO is considered a crucial test for Wynn and the Le Reve project. Bond analysts -- counting on the IPO to provide a comfort level for their "junk bond" investments -- said last week they expected the stock price to be lowered to attract buyers.
Wynn's company is in the midst of a "quiet period" mandated by the SEC and can't comment on the status of the stock offering.
Lowering the price is expected to attract fence-sitting buyers who have balked at commitment because of the issue's price. There has been no indication from analysts how the IPO is faring, although potential buyers who saw "road show" presentations on the Le Reve project in Los Angeles, New York, Boston and Baltimore last week said Wynn was on top of his game.
"Steve Wynn is very impressive, he's a spellbinder," said Ernest Monrad, who saw the presentation in Boston last week. "His knowledge and scope of what goes into a hotel is incredible. In the road show here, he talked for about an hour and he was still going. He's a great speaker."
But some investors are hesitant to climb aboard a project that won't see a financial return until April 2005, when the 2,700-room resort to be built at the site of the former Desert Inn hotel-casino is expected to open.
Assuming that the IPO becomes effective as scheduled, bond experts say the high-yield bond market would follow since money raised in the IPO would be in escrow and a protection to bondholders during the construction phase of the project.
Wynn Resorts and subsidiaries Wynn Las Vegas LLC and Wynn Las Vegas Capital Corp. plan to sell $340 million in second mortgage notes due in 2010. The company also has a $188.5 million loan for furniture, fixtures and equipment and cash and credit facilities worth more than $1 billion.
Experts say it's unclear what interest rate would be paid on the company's "junk bonds." Most concur the company would pay between 12 percent and 13 percent, while company officials were discussing a rate of between 10.625 percent and 11 percent in their road-show presentations.
The bonds are rated B3 by Moody's Investors Service and CCC+ by Standard & Poor's, both high-risk categories.
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