Wynn Issues $800M Debt to Redeem Bonds, Pay DOJ Settlement

Last week, the leading gaming and hospitality operator, Wynn Resorts, announced that it has reached a settlement with the US Department of Justice (DOJ). Under the settlement, the company’s subsidiary, Wynn Las Vegas, agreed to forfeit a record $130 million to settle alleged financial offenses.

Now, Wynn announced the pricing of $800 million in senior notes due in 2033 with a 6.250% interest rate. The aforementioned senior notes will be issued by the company’s subsidiaries in a private offering. Wynn hinted at the possibility of using the extra proceeds to redeem Wynn Las Vegas’ 5.500% senior notes due next year, as well as for the coverage of related fees.

Notably, the company admitted to planning to use the remainder of the net proceeds for general corporate purposes, adding that those may include the covering of the $130 million forfeiture announced on September 6, 2024. This otherwise means that the company is considering using part of its debt to settle the DOJ fine.

The aforementioned forfeiture was recognized as the largest for a casino company in the US so far. Under the non-prosecution agreement, Wynn Las Vegas admitted that it committed breaches to “circumvent the conventional financial system.”

Wynn confirmed that the notes will be offered under exceptions of the Securities Act of 1933, and they won’t be available to the general public. Instead, only qualified institutions that comply with Rule 144A of the Securities Act in the US or international buyers under specific rules will be able to purchase notes.

“Wynn Resorts Finance plans to (a) contribute and/or lend a portion of the net proceeds from the offering to its subsidiary, Wynn Las Vegas, who will use the amounts to (i) redeem in full Wynn Las Vegas and Wynn Las Vegas Capital Corp.’s 5.500% Senior Notes due 2025 and (ii) pay fees and expenses related to the redemption and (b) use the remainder of the net proceeds for general corporate purposes, which may include covering all or a portion of the $130 million forfeiture under the non-prosecution agreement described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 6, 2024,“

reads a statement released by Wynn Resorts
Leveraging Debt Isn’t Uncommon
In light of the record forfeiture with the DOJ, Wynn Las Vegas confirmed it strengthened its policies aiming at combatting money laundering. The operator was accused of using different unlawful methods including the use of proxy agents who gambled on behalf of other individuals.

Still, the record settlement and the recent issuing of notes suggest that Wynn is after ending this hurdle once and for all.

In a similar financial move, competitor MGM Resorts announced it raised its debt sale from $675 million to $850 million. Per the company’s recent announcement, it said that it plans to use the extra proceeds for corporate purposes and pay off existing debt.