MGM Mirage to sell Treasure Island casino to Ruffin!

[Newsbot]

NEW YORK/LOS ANGELES (Reuters) – MGM Mirage said on Monday it agreed to sell the Treasure Island Hotel & Casino on the Las Vegas strip to real estate mogul Phil Ruffin for a total of $775 million to help boost its liquidity.

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"I'm putting my money on Vegas," said Ruffin, who last year sold the New Frontier casino for a record $1.2 billion.

"I would not be able to get a property like TI (Treasure Island) in normal times."

MGM, a major holding of billionaire Kirk Kerkorian's Tracinda Corp, in October reported a 67 percent drop in quarterly profit.

Casino companies have been hit hard over the past year by slower consumer spending and tight credit markets. MGM's shares, which had plummeted from $86.75 a year ago, were up about 7 percent to $11.47 in afternoon trading.

The company is in the process of lining up final financing for its massive $11.2 billion CityCenter project on the Strip.

Standard & Poor's Ratings Services said its BB-minus rating on MGM's debt was unaffected by the agreement to sell the Treasure Island property.

"This transaction creates value to our stakeholders through significantly increased liquidity and enhanced financial flexibility," James Murren, chairman and chief executive of MGM Mirage, said in a statement.

Murren recently took over the top job after the retirement of former CEO and Chairman Terry Lanni.

The purchase price for the Treasure Island Hotel & Casino will consist of $500 million in cash and $275 million in secured notes.

The price is equal to about eight times the property's estimated 2009 cash flow, Barclays Capital analyst Felicia Hendrix said in a research note.

"The sale provides MGM extra liquidity as it enters a year with significant cash requirements and it implies a valuation for MGM that exceeds the recent trading range for the shares."

The deal is expected to close by the end of the second quarter of 2009 and MGM, the world's second-largest casino operator, anticipates reporting a substantial gain on the sale.

I hope the new owner is bringing back the pirates. That show kicked ass.