Casino, hotel closure, causes Huge losses for Wynn Resorts

Burning through precious cash

By Josh Resnek

If you follow the stock market, and if you pay attention to your retirement accounts or 401k’s – if you have them – then you know how badly everything has fared since the shutdown of the American economy.

In a world where cash is king and being broke is about as bad as a situation can be nowhere is this more evident than with the financial situation over at Encore Boston Harbor.

Mind you, Encore/Wynn Resorts is not going out of business even though they are presently out of business in Macau, Las Vegas and in Everett.

All the doors are locked. All the employees are being paid.

Nothing is coming in.

In addition, because nothing is coming in and Encore needs to pay its bills, executives at the company have been drawing down millions of dollars from its $850 million line of credit.

About 30 days ago, the company’s market cap value, that is, the value of all its common stock outstanding was about $14 billion.

Last week, it sank to about $4 billion – the price of the stock declining from a recent high of $130 to about $45 a share.

As the price for the stock fell, the dividend remained the same, increasing the percentage value of the interest paid vis a vis the value of the stock.

As the stock goes down, the interest value goes up.

Last week it was almost at 8%.

Tuesday, Wynn Resorts stock went up with the market in general on the news that a bailout is coming, and soon.

The stock price jumped beyond $60, to about $65.00. Correspondingly, its market share value went up to $7.12 billion. These incredible and unpredictable wild swings in price and market share evoke the kind of volatile moment we are experiencing with the US economy shut down.

Can Wynn Resorts survive with it doors closed?

No it can’t.

Can it pay its 5,000 employees here another round of salary for a month after its first 30 day effort is done?


What happens when Encore reopens in Everett finally?

They are back in business. They prosper, and they survive.

However it is likely when the reopening comes, the crowds will not be banging down the doors.

Whatever happens following the virus is gradual, until normalcy returns – if it returns.

If it doesn’t, the casino and hotel here faces the same difficulties as everyone now out of business.

Rebuilding the business after reopening will take time, energy and cash.

As long as Wynn Resorts maintains a cash position, it survives nicely. When its cash buffer is gone, Wynn Resorts will likely be gone with it. What then will Everett do?
That is a very good question as Encore pays Everett $30 million a year in lieu of taxes.

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