Casino stocks are experiencing buying interest Monday morning after MGM Mirage (MGM) signed a deal to sell Treasure Island to Ruffin Acquisition, LLC for $775 million.
MGM Mirage stock was up about 12% on the news, while shares of Vail Resorts Inc. (MTN) were up about 14%.
By 11:05 am Eastern Time, shares of MGM Mirage were up $1.24 at $11.92 a share and Vail Resorts stock was up $2.50 at $22.17.
Other stocks within the sector that are notably higher include Las Vegas Sands Corp. (LVS), Boyd Gaming Corp. (BYD), Isle of Capris Casinos Inc. (ISLE), Melco PBL Entertainment Ltd. (MPEL), Full House Resorts Inc. (FLL) and Lodgian Inc. (LGN)
Before the opening bell on Monday, MGM Mirage and Ruffin Acquisition, which is wholly owned by Phil Ruffin, said they signed an agreement whereby MGM Mirage, through its wholly owned subsidiary, the Mirage Casino-Hotel, will sell Treasure Island Hotel & Casino to Ruffin for $775 million.
The parties expect the transaction to close by the end of the second quarter of 2009. MGM Mirage expects to report a substantial gain on the sale.
The purchase price is to be paid at closing as $500 million in cash and $275 million in secured notes bearing interest at 10%, with $100 million payable not later than 175 days after closing and $175 million payable not later than 24 months after closing. The notes, to be issued by Ruffin Acquisition, would be secured by the assets of TI and would be senior to any other financing.
Last Tuesday, mountain resort operator Vail Resorts reported a wider loss for the first quarter, hurt by higher costs, but revenues surged year-over-year.
Vail said its net loss the first quarter was $34.50 million or $0.93 per share, wider than a net loss of $24.61 million or $0.63 per share in the prior-year quarter.
On average, seven analysts polled by First Call/Thomson Financial expected the company to report a loss of $0.83 per share for the quarter. Analysts' estimates typically exclude special items.
On the news, Barclays Capital lowered its 2009 earnings estimate for the company to $1.25 per share from $1.72 per share.
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