Cash is king in downturn and closure
By Josh Resnek
Encore Everett has been shut down since March 15.
Wynn Las Vegas has been closed since March 17.
Wynn’s Macau casino has reopened but there are no gamblers. Its casinos and hotels are empty.
But with about $3 billion in cash on hand,
Wynn is continuing to maintain its properties, to meet its many obligations, including paying the city of Everett, and to pay its employees both fulltime and part time as well as to give money away to struggling communities where it does business.
Encore has been a generous contributor to local food banks in Everett during this Coronavirus driven economic catastrophe.
The company has been bearing the loss of revenue and paying out $2.5 million a day in Macau to maintain its operation there and cash interest expenses of $500,000 a day.
Encore Boston Harbor and Wynn Las Vegas have been costing the company $3.5 million a day and cash interest of $800,000 a day.
Its first quarter results have tanked.
The company that posted $1.64 billion of income in the prior quarter expects adjusted quarterly income to come in at $912 million – a decline of about $700 million.
Wynn Resorts stock has plum- meted and made sharp daily comebacks in recent weeks during hectic and at time, mercurial trading days on the stock exchange.
When markets opened Tuesday, Wynn Resorts stock stood at $69, down from a high of $130 last year.
It went as low as $50 two weeks ago.
The closed Everett facility – the grand hotel and casino which cost $2.6 billion to build and to open last June – is in stark contrast to the facility when it was open and taking in about $50 million a month before the virus shut it down.
At this time, the $30 million dollar a year payment to the city of Everett does not appear to be in jeopardy.
Tax payments to the state have collapsed during this virus disaster.
Unless the casino and hotel open, and soon, the Wynn House of cards will collapse, like everything else standing around it.
There is speculation shared among financial handicappers in Wall Street circles that Wynn Resorts will be dropping its quarterly dividend shortly to conserve cash.
Efforts to determine whether or not Everett has been fully paid its in lieu of taxes bill by Wynn Resorts remained an unanswered question as we went to press this week.
“They must pay us what they owe,” Councilor at Large Wayne Matewsky told the Leader Herald. “Shut down or not, we are owed the money,” he said.
However, if this national shut- down and social distancing policy remains in effect, Wynn will ultimately be hard pressed to pay its bills when its cash has run out – and this will include the City of Everett.
Paying out $7 or $8 million a day with nothing coming in, Wynn Resorts can last for quite a while, taking it out of its $3 billion cash reserve.
The company could conceivably survive for ten months, at least, before going broke.
Hopefully, things will be back to a near normal long before that.
No one is immune from the effects of the national economic shutdown – not billion dollar companies – not much smaller businesses – not individuals.
Everyone is struggling for a way out.