MGM säljer Treasure Island

[hajen]

UPDATE:MGM To Sell Treasure Island For $775 Million; Shares Surge

 

20:16

 

(Updates with remarks from CEO and revised stock price)

 

 

By A.D. Pruitt

 

Of Dow Jones Newswires

 

 

NEW YORK -(Dow Jones)- MGM Mirage (MGM) said Monday it will sell its Treasure

Island Hotel & Casino on the Las Vegas Strip to Ruffin Acquisition LLC for $775

million. The move is alleviating concerns on Wall Street that MGM Mirage will

run into a liquidity crisis as it tries to shore up financing for its $11

billion CityCenter resort in Las Vegas amid the credit crunch.

 

The companys stock rose 7 to $11.44 in recent trading.

 

For MGM...it helps resolve liquidity concerns through the end of 2010, said

Bill Lerner, an analyst at Deutsche Bank. He said not only should the sale

proceeds help MGM Mirage finance its balance on the CityCenter project, but the

company also should be able to take out debt maturing in 2009 and 2010 should

credit markets remain frozen.

 

MGM Mirages share price has been battered this year as investor fret about

how gaming companies will finance expensive, swanky resort developments amid a

weakening economy. The major credit rating agencies have expressed doubts about

how MGM Mirage will secure all the financing it needs to complete CityCenter

and have said the casino operator will likely see higher-than-expected

out-of-pocket expenses for the 76-acre resort.

 

This certainly (relieves) any concerns that people should have and creates

more optionality, Jim Murren, MGM Mirages chief executive, said in an

interview.

 

This is a very, very important step in our game plan to become a far more

financially flexible company going forward, he said. We are going to be very

aggressive in addressing the fact were in a recession.

 

He said that MGM Mirage and joint-venture partner Dubai World have a total of

$1.2 billion left that they are committed to finance for CityCenter if the

money isnt raised elsewhere.

 

The housing crisis and other economic troubles are prompting consumers to

gamble less and to spend less at the luxury boutiques and restaurants from

which casinos draw most of their profits.

 

Through Friday, MGMs stock had slumped 87 on the year.

 

I think the bankruptcy trade immediately unwinds, moving forward, Lerner

said, noting a significant amount of short positions in the companys stock due

to liquidity concerns.

 

Ruffin Acquisition, wholly owned by Phil Ruffin, will pay $500 million in

cash and issue $275 million in secured notes with a 10 yield, that are payable

within two years of closing. That is slated to take place by midyear and MGM

Mirage expects to report a large gain on the sale.

 

It should work out for both parties, said Dennis Forst, an analyst at

KeyBanc Capital Markets.

 

I think once CityCenter is completed, the company can generate close to $1

billion a year in free cash flow a year. (That) could go a long way to reducing

the leverage on MGMs balance sheet that has been bothering people, he said.

 

Treasure Island has 2,885 guest rooms and suites and approximately 90,000

square feet of gaming space, and fine and casual dining outlets.

[gdaily]

$775 million

 

Det känns som ett väldigt lågt pris, faktiskt.

[hajen]

Det känns som ett väldigt lågt pris, faktiskt.

 

Ja 5-6 miljarder avrundat , känns som ett billigt kap i denna kris. Fast de hade ju likviditetskris, och det kanske inte fanns så många intressenter. Vad vet jag