Wynn says Okada motion recycles old claims

Wynn Resorts, ensnarled in a lawsuit with its one-time largest shareholder, dismissed as old "baseless allegations" a motion by Japanese pachinko tycoon Kazuo Okada to stop the casino from forcibly buying his shares.

"Mr. Okada is recycling his previous baseless allegations in the press, while continuing to interfere with the judicial process by refusing to accept service of court documents," the casino said in a prepared statement. "The facts clearly justify the carefully considered actions taken by the Wynn Board to redeem an unsuitable shareholder in order to protect the company and its shareholders."

Okada escalated his legal battle against Wynn CEO Steve Wynn on Thursday by filing a motion for a preliminary injunction to protect his stake in Wynn Resorts (>> Wynn Resorts, Limited), the latest blow between the two billionaires who were partners for more than a decade.

Okada asked a federal judge in Nevada to immediately restore the rights of his Universal Entertainment Corp (>> Universal Entertainment Corporation) subsidiary, Aruze USA, as the largest shareholder of Wynn Resorts. Okada also filed an amended counterclaim against Wynn, the company's general counsel and individual board members.

Okada, whom Wynn once called his "best friend" and who helped bankroll Wynn's casino empire starting in 2000, has been fighting to claw back his 20 percent stake in Wynn Resorts that Wynn forcibly bought back at a steep discount after producing a report that said Okada had engaged in "improper" activities.

The battle that erupted in January when Okada sued Wynn for denying him access to key financial documents has thrown a harsh spotlight on corporate governance in the gambling industry at a time when casinos are mushrooming throughout Asia.

Until February 20, Okada held the largest single stake in Wynn Resorts despite being ousted from Wynn's Macau unit Wynn Macau (>> Wynn Macau Ltd) on February 24. He remains a member of the board at Wynn.

The latest filing is also an attempt to head off efforts to oust Okada from the board. Wynn has already filed a preliminary proxy statement announcing that a special stockholder meeting will be held for the sole purpose of removing Okada. No date has been set, but the company is allowed to call such a meeting with 10 days' notice.

Okada, chairman of Universal Entertainment, said in the filing that Wynn "indulged in fraud, deception, theft and betrayal to maintain control of his gaming enterprises."

Detailed in a 106-page amended counterclaim, Okada said "in the course of trying to illegally force out Aruze USA as Wynn Resorts largest stockholder, Mr. Wynn and Wynn resorts' General Counsel Kimmarie Sinatra committed a series of predicate acts of racketeering, which include fraud, acquiring property under false pretenses, acquiring signatures under false pretenses and other similar wrongful activities."

"This motion for preliminary injunction and our amended counterclaim seeks to protect our investment and restore independent judgment and sound corporate governance to the Wynn Resorts Board," Universal Entertainment and Aruze USA said in a statement accompanying the legal filings.

A Wynn spokesperson was not available to comment.

"PAYING FOR BENEFITS"

Okada, who made his riches in pachinko, a mix between slots and pinball that rakes in about 20 trillion yen ($250 billion) annually, is building his own casino in the Philippines. Wynn, known for building premium casinos like the Bellagio and Mirage in Las Vegas, said Okada went against a Wynn board decision by developing the property, making Okada a direct competitor.

Okada is also setting up a string of fine-dining restaurants in Asia and is in negotiations to build a casino resort in South Korea. Trained as an engineer, he has not ventured into developing leisure properties previously.

Wynn is adding to his properties in Macau by building a new $4 billion casino in the world's largest gambling destination.

Okada alleges in the filing that Wynn has failed to explain how a $30 million payment related to Macau was spent and said a $135 million donation to the University of Macau Development Foundation by Wynn could be construed as "paying for benefits" because the date of the donation and the term of Wynn Macau's gaming license in Macau coincide.

A report commissioned by Wynn last year that claimed Okada made improper payments to obtain his Philippine casino license, which could threaten Wynn's own licenses, did not show anything that "could pose a legitimate and imminent danger to Wynn Resorts' gaming licenses," Okada's filing said.

Wynn had also communicated to Okada through intermediaries a few days prior to redeeming Okada's shares that he would be willing to buy the stock at a significant discount.

The filing says Okada disagreed and his shares were then redeemed at a 30 percent discount. The calculation for the discount was done by Moelis & Company whose founder has a long history with Wynn.

(Reporting by Farah Master; Editing by Matt Driskill, Bernard Orr)

By Farah Master and Sue Zeidler

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