March 20, 2009 - 9:00 pm
Phil Ruffin is doing MGM Mirage a favor, and it only cost him $100 million.
Ruffin, 73, who was approved Thursday by the Nevada Gaming Commission to take over Treasure Island from MGM Mirage, said he altered his deal with the casino operator.
Instead of paying $500 million up front in cash, Ruffin increased the amount to $600 million. He will try to finance the remaining $175 million. If he can do that by April 30, MGM Mirage will discount $20 million from the agreed-upon $775 million purchase price.
Ruffin was expected to take over ownership of the 2,885-room Treasure Island, originally built and operated by Steve Wynn, at 3 a.m. today.
In December, when Ruffin’s purchase was announced, MGM Mirage said it hoped to close the transaction by June 30. At the Gaming Control Board meeting on March 4, Ruffin said he hoped to close the deal by the end of the month.
“They could use the cash, and we are happy to take over sooner,” Ruffin said after gaming regulators spent about 30 minutes praising his return to the gaming industry after a nearly 20-month absence.
“This is a breath of fresh air what you’re doing here,” commission member Dr. Tony Alamo Jr. told Ruffin, citing months of bad news about the casino industry.
Ruffin is the former owner of the New Frontier. He sold the since-demolished property in July 2007 to New York-based Elad Group for $1.2 billion.
“I wanted to accommodate (MGM Mirage) and we’re getting in at a good time,” Ruffin said. “The (NCAA) basketball tournament is going on, which is very good, and it will be good to get that summer business.”
Ruffin told the gaming commission that advance room bookings for April and May looked strong. He said business during January, February and March was “horrible.”
Ruffin said he was surprised that banks have been giving him some trouble in financing the remaining $175 million, even after his plans to put $600 million in cash into the purchase.
“It’s unbelievable, I’ve never seen anything like it,” Ruffin said. “But we’ll get it done.”
MGM Mirage, which said two days ago it received a two-month waiver from its lenders to avoid violating loan covenants but still may face a bankruptcy filing to restructure its $13.5 billion in debt, has been having liquidity issues.
The sale of the Treasure Island will leave MGM Mirage with nine Strip hotel-casinos, but it will give the company much-needed cash for its balance sheet.
“The Treasure Island is a positive development on two fronts,” MGM Mirage Chairman and Chief Executive Officer Jim Murren said Tuesday. “Closing the sale sooner causes less disruption to our employees and we can get the cash quicker.”
MGM Mirage will run the casino’s race and sports book for at least six months, but Ruffin will have access to the casino database of customers. He said he planned to retain all the Treasure Island employees, although Treasure Island President Tom Mikulich will step down. Mikulich will serve as a consultant for an undetermined period.
Ruffin said he will be the new president of Treasure Island.
“We’ve had an office there for a while and we’re ready to go,” Ruffin said.
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871.