MGM Mirage unloads Treasure Island for $500 million

MGM Mirage (NYSE: MGM) has reached a deal to sell its Treasure Island Hotel & Casino to Phil Ruffin for $500 million in cash. The deal has a total value of $775 million including $275 million in secured notes. In a press release announcing the deal, Ruffin said that "We are very excited to be in a position to acquire such a stellar property in Treasure Island. The property is in pristine condition, ideally located in the heart of the Strip and benefits from a wonderful team of outstanding employees. We are financially positioned to close on this transaction once all of the necessary approvals have been received."

MGM said it anticipates recording a "substantial gain" on the sale of the property, which was purchased as part of MGM Grand's acquisition of Mirage Resorts in May of 2000.

Shares of MGM Mirage are up about 11% on the news, although they were up more than 23% in earlier trading. Given the state of the economy and MGM's leveraged balance sheet, the proceeds of the deal are likely to be used to pay down the company's substantial debt load.