In the wee hours of the morning last Friday, Phil Ruffin quietly became the new owner of Treausre Island Hotel & Casino on the Las Vegas Strip.
Ruffin was approved by gaming regulators a day earlier and promptly paid MGM Mirage $600 million in cash toward a purchase price of $775 million.
The $175 million balance is secured by a note bearing interest of 10 percent and payable not later than 36 months from the closing of the sale.
Ruffin has the option to prepay the note on or before April 30, 2009 and receive a $20 million discount on the purchase price.
But according to published reports, he has so far found the credit market not leaping at the opportunity of loaning money, even such a small amount relative to the purchase price, on casino/resort deals.
Nonetheless, the deal seems a good fit for the former owner of the Frontier, and MGM Mirage, which needed the cash infusion to help with its own cash needs.
"TI is in great hands with Phil Ruffin and we wish him and all of the property’s wonderful employees nothing but the best," said Jim Murren, chairman and CEO of MGM MIRAGE.
TI is located next to The Mirage, which remains an MGM Mirage property. The pirate-themed resort features 2,885 guest rooms and suites, approximately 87,000 square feet of gaming space, several fine and casual dining outlets, The Sirens of TI – the iconic pirate battle attraction, and Mystere, the first permanent production in Las Vegas by Cirque du Soleil.
"We are very excited to have acquired such a stellar resort in Treasure Island," Ruffin said. "The property is in pristine condition, ideally located in the heart of the Strip."
For at least the first six months of operation, the casino and its race and sports book will be managed by MGM Mirage.
As a result of the sale, MGM MIRAGE is expected to report a substantial gain in the first quarter.
According to analyst David Katz of Oppenheimer & Co., the sale is a "positive for MGM as it received cash sooner than the original expectation of a closing by the end of 2Q09."
Future brightens for Ruffin's Kansas dog track
Too many obstacles snag sale of MGM's Mirage
MGM open to more sales of casinos
Few changes ahead for Treasure Island in Las Vegas