Ruffin to Pay $775M for Vegas Strip’s Treasure Island
- Dec 15, 2008
MGM Mirage has agreed, through its wholly owned subsidiary The Mirage Casino-Hotel, to sell the Treasure Island Hotel & Casino on the Las Vegas strip to Wichita-based Ruffin Acquisition L.L.C. for $775 million. The reclusive billionaire Phil Ruffin owns Ruffin Acquisition. According to Alan Feldman, a spokesperson for MGM Mirage, a casino owner typically evaluates four criteria when considering an offer. First, is it a fair value offer? While declining to disclose a dollar figure, Feldman told CPN that the company expects to report a substantial gain on the sale. A second criterion is the purchaser’s ability to get licensed. “Agreements are always contingent on licensing,” Feldman said. “And Mr. Ruffin has been licensed in Nevada before and should have no trouble with the process.” Another key consideration involves the purchaser’s relationship with labor. “This is only really an issue when someone is hostile to labor,” Feldman continued. “Labor problems can wreck a sale, but Mr. Ruffin has an outstanding relationship with labor.” Of course the most important consideration, especially today, is whether or not a deal needs and can get financing. “This is all but an all cash offer,” Feldman said. “Most of the price is being paid up front.” Under the terms of the agreement, Ruffin Acquisition will pay $500 million of the purchase price at closing. It will then issue $275 million in notes secured by the assets of Treasure Island to The Mirage Casino-Hotel. The notes will accrue interest at 10 percent, with $100 million payable within 175 days of closing and $175 million payable not later than 24 months after closing. The notes will be senior to any other financing. The parties expect the transaction to close in the second quarter of 2009. Las Vegas-based MGM Mirage acquired Treasure Island as part of the merger between MGM Grand Inc. and Mirage Resorts Inc. in May 2000. Treasure Island features 2,885 guest rooms and suites, approximately 90,000 square feet of gaming space, a number of restaurants, the Sirens of TI, a pirate battle attraction and Mystere, the first permanent production in Las Vegas by Cirque du Soleil.