Wynn shares trade higher even after mistake filing

AP News
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Posted: Mar 02, 2012 3:44 PM
Wynn shares trade higher even after mistake filing

Wynn Resorts Ltd. shares remained higher Friday, even after the company said that a filing reporting progress on a new resort in the Chinese gaming hub of Macau was a mistake.

Shares had jumped 6 percent after Wynn filed a regulatory report saying it made progress on a lease for the resort. Then trading was halted, and the company later said in another filing that the initial filing was a mistake. Wynn says there was no agreement and the filing was submitted by accident.

When trading resumed, the stock fell momentarily but still kept most of its earlier gains. Shares were up more than 4 percent in late afternoon trading.

That might be because many investors still believe that Wynn is close to getting approval for its latest Macau project, even if the filing was declared erroneous, Sterne, Agee & Leach analyst David Bain said in an interview. The depth and specificity of the filing made it look legitimate and many investors are betting that Wynn simply filed it earlier than it meant to, Bain said.

"The perspective is ... that they have this in the hopper," Bain said. "Even if they pulled it back, they had it ready to go."

Bain said that was a risky bet because the land deal could still be scuttled. The accidental filing itself might strain Wynn's relationship with Chinese authorities.

"I can't imagine that the Macau government is going to wake up in the morning and feel incredibly excited about this coming out," Bain said.

In the erroneous report, Wynn Resorts said its subsidiary in Macau had reached an agreement with the government there that would open the door to developing a hotel and casino. Wynn said its subsidiaries in Macau reached a deal that will give it a 25-year lease to 51 acres of land in the Cotai region. The agreement was made public in January when the lease contract was published in the official gazette of Macau, Wynn said in the filing with the U.S. Securities and Exchange Commission.

In its retraction, Wynn said the contract had not been printed in the gazette but the company did not explain how or why its erroneous report was filed. When asked for comment, the company did not elaborate beyond its short statement saying the filing was an error.

Macau is a major resort and gambling destination that draws visitors from around Asia. Wynn's performance is increasingly tied to its operations in China.

The company's two Macau properties generate a majority of the company's profit. The operations in China have helped offset the slow casino industry's slow recovery in the U.S.

The company said revenue jumped 9 percent during its most recent quarter at its China properties to $995.5 million. Revenue in in Las Vegas rose 7 percent to $348.4 million during the same period.

In China, Wynn operates the Wynn Macau casino resort, which has 600 hotel rooms and suites and about 222,000 square feet of casino space along with dining and shopping. The company opened the Encore at Wynn Macau in 2010, adding a luxury hotel with about 400 rooms and villas. Wynn is the world's third-largest casino company as measured by revenue.

Shares of the Las Vegas company had jumped $7.70, or 6.3 percent, before trading was stopped. In late afternoon trading Friday, stock was remained up $5.20, or 4.3 percent, to $127.26.