Wynn Selling $800M in Debt to Pay DOJ Fine, Redeem 2025 Bonds

September 10, 2024

In order to repay bonds that mature in 2025 and to settle a punishment of $130.13 million that the Department of Justice (DOJ) recently imposed, Wynn Resorts (NASDAQ: WYNN) said on Tuesday that it has issued $800 million worth of corporate debt in a private sale.

With the exception of Wynn Resorts Capital, the recently issued senior notes are "guaranteed by all of Wynn Resorts Finance's domestic subsidiaries" and have a 2033 maturity date and 6.25% interest rate.

"Wynn Las Vegas, LLC 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 (the “2025 LV Notes”) 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,” according to a statement issued by the gaming company.

The largest-ever fine imposed on a single domestic casino, Wynn revealed to investors last Friday that it had negotiated a $130.13 million settlement with the Justice Department "based on admissions of criminal wrongdoing," according to the DOJ.

Wynn Bond Sale Requires Quick DOJ Penalty Payment

The gaming firm stated that some of the revenues from the bond sale might be used to pay the $130.13 million it owes the government. Although the company did not specify when it would make that payment, it seems likely that the casino operator will take quick care of that debt.

Wynn Las Vegas was found to have broken several anti-money laundering regulations and willfully permitted some Chinese patrons with a questionable reputation to visit and place bets at the Strip integrated resort. The investigation was conducted by the Department of Homeland Security's investigative unit, the IRS, and the DEA.

The DOJ cited Wynn Las Vegas as one instance where a Chinese customer was allowed to gamble there despite having "spent six years in prison in China for conducting unauthorized international monetary transactions and violations of other financial laws."

As part of a nonprosecution agreement (NPA) with the government, Wynn Las Vegas informed the authorities that employees engaged in the dubious transactions are no longer employed by the company, acknowledged misconduct, and mentioned that it has taken numerous steps to strengthen its anti-money laundering procedures.

Wynn Bond Sale Has An Additional Goal

The Wynn bond sale is significant because it enables the operator to redeem bonds that are due in the next year, in addition to potentially achieving the goal of swiftly removing the DOJ liability from its books.

Wynn recently announced fresh debt sales to settle liabilities that were due in the next year, following rival MGM Resorts International (NYSE: MGM) in this move. Prior to such statements, a few analysts pointed out that gaming companies could manage their commitments that come due in 2025, therefore such transactions weren't essential.

Regarding unrelated but connected news, International Game Technology (NYSE: IGT), a major player in the gaming and lottery industries, announced on Tuesday that it is offering a new bond issue priced in euros in order to redeem about $500 million in senior secured notes that mature in 2025.