|By Howard Stutz, Las Vegas
Review-JournalMcClatchy-Tribune Business News
Nov. 14, 2006 - Shareholders of Wynn Resorts Ltd. will receive a $6 per share dividend on Dec. 4, the company announced Monday.
Gaming analysts said the dividend may be related to the company's sale earlier this year of a subconcession to operate a casino in Macau, China. Wynn Resorts sold the subconcession for $900 million to an Australian casino operator.
In its third-quarter earnings reported Nov. 7, Wynn Resorts said that without the proceeds from the subconcession sale, the company would have lost 1 cent per share during the three-month period ended Sept. 30, rather than post earnings of $6.43 a share.
"The distribution of cash in excess of our earnings and profits for our 2006 fiscal year will be treated as a tax-free return of capital to the extent of the stockholder's adjusted tax basis in our shares and thereafter as gain from the sale or exchange of a capital asset," Wynn Resorts said in a statement.
The Las Vegas-based casino operator said the dividend will be paid to shareholders of record as of Nov. 23.
Wynn Resorts Chairman Steve Wynn, who holds about 24.5 million shares of the company, stands to make about $147 million from the dividend.
The news, announced before the stock market opened Monday, sent shares of Wynn soaring on the Nasdaq National Market to $88.67, up $6.48, or 7.88 percent. More than 6.3 million shares were traded, six times the average daily volume.
The dividend will benefit some of Wynn's largest shareholders, including former downtown casino operator Jack Binion, who has purchased more than 2.4 million shares of the company since July.
Wynn also announced Monday that Binion would end his day-to-day operational responsibilities at the Wynn Macau casino and serve as director and principal in the development team in the company's Macau operations.
Gaming analysts said Wynn didn't need the capital for future developments, including a potential 54-acre site on the Cotai Strip in Macau. Deutsche Bank gaming analyst Bill Lerner thought partners would pay for the development costs.
"We believe Wynn will continue to monetize assets, enabling it to improve returns and return capital to shareholders," Lerner said in an investors note. "The company's golf course acreage in Las Vegas may be another example of monetization over the next few years, albeit even more powerful than this subconcession payout today."
Bear Stearns gaming analyst Joe Greff said Wynn's existing cash and debt capacity could fund construction of the Encore at Wynn Las Vegas and an expansion to Wynn Macau.
"While not expected, the decision does not come as a surprise given Wynn's significant financial flexibility as a result of their sound operations to date and the $900 million in proceeds from their Macau subconcession sale," Greff said in an investors' note. "Clearly, we believe the decision will serve as yet another catalyst for the shares."
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