Kerkorian sells Las Vegas casino-hotel property for $500 million
16 Dec 2008
Casino operator MGM Mirage Inc., majority owned by investor Kirk Kerkorian, is selling the Treasure Island Hotel & Casino on the Las Vegas Strip to billionaire Phil Ruffin for $500 million, the company said Monday.
In October, the falling value of Kerkorian's investments in Ford had forced him to pledge another 50 million shares of his MGM Mirage casino company to back the $600 million credit line used to buy Ford stock. In a filing with the SEC, Kerkorian's holding company Tracinda had said it would focus on the gaming and hospitality, as well as the oil and gas industries, "in light of current economic and market conditions." (See: Kerkorian loses faith; starts selling Ford stock)
Ruffin, whose interests include casinos and greyhound racetracks, purchased the property through Ruffin Acquisition LLC for $500 million cash and $275 million in secured notes issued by Ruffin Acquisition and secured by Treasure Island's assets, MGM Mirage said. The combined value of the deal, including debt, is $775 million.
"This is a terrific deal for everyone involved," said Alan Feldman, spokesman for Las Vegas-based MGM Mirage. "We are able to complete a transaction at the right price with no financing involved through any other third party."
MGM Mirage has owned the Treasure Island since May 2000, when MGM Grand Inc. purchased Mirage Resorts Inc. The casino company said it expects to report a ''substantial'' gain on the sale, which may be completed by the second quarter of 2009. MGM shares rose 81 cents, or 7.6 per cent, to close at $11.50 Monday.
MGM Mirage chief executive James Murren called Ruffin "a known and trusted community partner," and said the sale would increase MGM Mirage's financial flexibility. In a statement issued through MGM Mirage, Ruffin called the Treasure Island "ideally located in the heart of the Strip."
Casino gambling revenue on the Las Vegas Strip, where MGM Mirage is the biggest owner, has fallen for 10 straight months through October as consumers curb travel amid the recession, according to data released by Nevada's Gaming Control Board on 10 December. The recession may last at least a year longer and maybe into 2011, providing the opportunity to buy Treasure Island, Ruffin said.
''Twenty acres on the Strip, property like this would not become available under normal circumstances,'' Ruffin said from Las Vegas. ''I knew they wanted to do private financing for CityCenter. This helps get them where they need to go. We had the money and I like the location.''
Treasure Island is set next to The Mirage, amid the newer Wynn Las Vegas and Encore resorts, The Venetian and Palazzo towers and the Fashion Show retail mall. It was built for $450 million by casino mogul Steve Wynn, and opened in 1993 featuring a public pirate show set on a replica ship in front of the building. It now has 2,885 guest rooms and suites, 90,000 square feet of gambling space, restaurants and entertainment.