Las
Vegas hotel and casino
operator MGM Mirage recently informed that it has agreed to sell the Treasure
Island Hotel and Casino to Ruffin Acquisition LLC to help the company to boost
its liquidity. MGM Mirage, which acquired the Treasure Island as part of the
2000 combination between MGM Grand and Mirage Resorts, expressed that its
property will be sold for $775 million, including $275 million in secured notes
issued by Ruffin Acquisition and secured by Treasure
Island's assets. Ruffin Acquisition LLC, former owner of the New
Frontier hotel-casino, will pay $500 million in cash and issue $275 million in
secured notes payable within two years of closing. That is slated to take place
by mid 2009 and MGM Mirage expects to report a large gain on the sale.
"This transaction
creates value to our stakeholders through significantly increased liquidity and
enhanced financial flexibility" said James Murren, chairman and chief executive of
MGM Mirage.
MGM and other hotel
operators in Las Vegas have been seriously affected
by the economic recession, casino gambling revenue on the Strip declined for the 10th straight month
in October as visitors considerably reduced their travel spending and airlines cut
the number of flights to the Las Vegas
due the financial downturn. MGM Mirage has been under a lot of pressure to
secure the financing needed to complete the CityCenter. The company,
which also owns and operates the Bellagio, Mandalay Bay Resort and Casino, MGM
Grand and Circus Circus hotel
in Las Vegas, has recently delayed the
development work for its MGM
Grand project in Atlantic City
as well as a Las Vegas Strip
joint venture
with Kerzner International
and Istithmar. MGM
Grand has also been affected overseas by new visa restrictions in China, which are damaging its investments in Macau.
Phil Ruffin, who got over$1.24
billion from his 2007 sale of the New Frontier Hotel and Casino in Las Vegas,
said that he will be taking over the Treasure Island operation during the first
quarter 2009 after he gets his Nevada gaming license, which he lost after selling
the Frontier.
“I’m a serial entrepreneur.
I can’t help it” Ruffin said on an interview giving this Monday.
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