Wynn details $2.5 billion plan for Le Reve in IPO

Steve Wynn, the builder of the Mirage Resorts empire and owner of the Desert Inn hotel-casino on the Strip, today filed for an initial public stock offering with the Securities and Exchange Commission to partially fund Le Reve, a $2.5 billion luxury resort he hopes to open in March 2005 at the Desert Inn site.

The IPO, filed this morning by Wynn Resorts Ltd., Las Vegas, is underwritten by Deutsche Bank Securities (formerly Deutsche Banc Alex. Brown), New York, Bear Stearns & Co., New York, and Banc of America Securities, San Francisco, and Dresdner Kleinwort Wasserstein, New York.

The timing of the initial stock sale and the initial stock price were not listed. The filing projects proceeds of $355 million from the offering.

In addition, Wynn Resorts and its subsidiaries, Wynn Las Vegas LLC and Wynn Las Vegas Capital Corp., will jointly offer $350 million in second mortgage notes.

The filing says the stock would be offered on the Nasdaq Stock Exchange with the proposed trading symbol “WYNN.”

The filing of the offering puts Wynn Resorts in an SEC-mandated “quiet period” that prohibits the company from making comments about the project. However, several details of Wynn’s plans are outlined in the prospectus filed with the SEC.

The document says Wynn is expected to spend $2.5 billion on the project, which includes design costs, the cost of the land, capitalized interest, pre-opening expenses and all financing fees. It also includes a number of expenses that aren’t directly related to Le Reve’s construction.

That includes a $23.3 million investment in Wynn’s proposed resort project in Macau in China, and $38 million for the acquisition of a corporate aircraft.

By comparison, Bellagio cost $1.8 billion to open and the Venetian, $1.5 billion.

Of the $2.5 billion, design and construction costs would be about $1.375 billion. Wynn has hired veteran Las Vegas contractor Marnell Corrao to build the resort.

Wynn’s strategy for Le Reve is to develop a “must-see” UFA casino resort on the Las Vegas Strip, the first major hotel-casino resort on the Strip in more than four years.

The prospectus said construction is expected to begin in September.

According to the document, Le Reve would have 2,701 rooms and suites, 18 dining outlets, including six fine-dining restaurants and a new exclusive 18-hole championship golf course. The resort also would include 78,200 square feet of retail shopping space with brand-name, high-end boutiques, plus a 130,000-square-foot convention area. That retail area, about the size of the Bellagio’s, would be much smaller than the malls at competitors the Venetian, Caesars Palace and the Aladdin.

The resort also would have a new water-based entertainment production by Franco Dragone, who developed Bellagio’s production of “O” and Treasure Island’s “Mystere” shows. A 2,080-seat showroom is planned and entertainment production costs have been listed as a $24 million expense in the prospectus.

The resort is expected to provide 7,000 jobs when it opens.

Wynn also plans an on-site, full-service Ferrari and Maserati car dealership and an art gallery displaying the works from the private art collection of Wynn and his wife, Elaine.

The prospectus says Le Reve will capitalize on its proximity to the Las Vegas Convention Center and the Sands Expo and Convention Center to attract conventioneers. The resort plans to offer free shuttle service to the Las Vegas Convention Center.

“Le Reve will be different from any other Las Vegas resorts in that it will not focus on a highly themed experience,” the prospectus says. “Instead, Le Reve will offer an environment having a sophisticated, casually elegant ambiance.”

The filing also explains the role of Wynn’s Japanese partner in the venture, Kazuo Okada, controlling owner of Aruze Corp. Okada would own 47.431 percent of Wynn Resorts’ common stock.

Aruze won a Japanese lower court judgment, but the Japanese tax authority has filed for an appeal in the case. The filing said Wynn has the option to acquire Aruze’s shares if Nevada regulators do not approve the Japanese company’s ownership in the company if it loses the appeal.

Dave Ehlers, a gaming analyst with Las Vegas Investment Advisers, said the higher price tag on Le Reve should not be a source of concern.

“Steve Wynn’s record speaks for itself,” Ehlers said. “He knows how to do it.”

Ehlers said when The Mirage was built, Wall Street pessimists said Wynn would not be able to generate the cash flow necessary to pay off debt, but that property became the most successful in the industry until Bellagio took its place.

“The record is relatively clear that betting against one of Steve Wynn’s super projects has not been financially rewarding and I would be the last one to suggest that he would not be able to do the same thing with Le Reve,” Ehlers said.

Wynn acquired the Desert Inn from Starwood Hotels & Resorts Worldwide Inc. for $270 million in April 2000 with funds he received in the sale of Mirage Resorts Inc. to what is now MGM MIRAGE.

Wynn received more than $500 million, pre-tax, from MGM Grand Inc.’s acquisition of Mirage Resorts Inc., which owned Bellagio, The Mirage and Treasure Island on the Strip, the Golden Nugget in downtown Las Vegas, the Atlantic City Golden Nugget and the Beau Rivage in Biloxi, Miss.