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Treasure Island owner wants to buy up

Tue, May 7, 12:07pm by Staff Writer

The Las Vegas Strip could be set for a shake up, with some of its largest casino operators eyeing off the prospect of buying Caesars Entertainment properties.

The owner of Treasure Island Phil Ruffin hasn’t been backwards about coming forwards with his interest in the properties, the Las Vegas Review Journal reports.

The 84-year-old businessman said he would like to get his hands on Caesars Strip properties – which include Caesars palace, Harrah’s and Paris among others – should activist investor Carl Icahn push for asset sales.

Ruffin said he would come up with $1 billion in cash and raise even more in debt for Caesars properties.

“They have some great locations and we would have strong interest,” Ruffin said during an interview last Tuesday at his office.

“We don’t have any debt and so we could borrow a lot of money if we found the right deal,” he said.

In February, Icahn recommended the company consider selling itself as one way to boost shareholder value.

Icahn owns 18 per cent of Caesars, and its stock currently trades at a discount compared to its peers.

Caesars stock is down 20 per cent in the past year compared with a 10 per cent rise for the S&P 500.

A spokesperson for Caesars declined to comment on Ruffin’s interest.

Ruffin said he could borrow an amount equal to about six times a property’s cash flow.

He said he is primarily interested in Strip properties that can generate an annual cash flow of $200 million to $300 million.

Strip properties should be able to fetch valuations equivalent to at least 10 times their cash flow, said Barry Jonas, an analyst at SunTrust Robinson Humphrey.

Boyd and Eldorado more reserved about their interest

Boyd Gaming chief executive officer Keith Smith said on April 25 that his company is interested in having a Strip presence, but avoided commenting on Caesars.

Boyd owns casinos in downtown as well as off the Strip on Flamingo and Tropicana.

“If there is an asset on the Strip that becomes available, that’s priced right, that is additive to the portfolio, that can generate a return, then we’ll execute on it,” he said.

Eldorado Resorts chief executive officer Thomas Reeg told Wall Street analysts Thursday that his company would take a “hard look” at targets, but made no mention of the company.

In March, several media outlets reported that Eldorado explored a merger with Caesars.

“We read the same newspapers that you read, so we read the same rumours about what we might or might not be doing. We’re not going to comment on any particular potential transaction,” Reeg said during the earnings call.

Large operators like Boyd and Eldorado could offer a higher price than Ruffin because of the greater savings they could generate by merging a Caesars property into their company.

Nonetheless, the businessman shouldn’t be discounted, analysts said.

“While we’ve looked at Caesars sales scenarios with individual companies like Eldorado assuming just regional asset divestitures, anything is possible in regards to individual Caesars assets in Las Vegas also changing hands. We would consider Mr Ruffin to be a qualified buyer,” Jonas said.

According to Forbes, Ruffin has a net worth of about $3 billion, with the real estate developer best known for his timely purchases of Strip properties.

The Kansas native snapped up the New Frontier Hotel in 1997 for $165 million and sold it a decade later for $1.2 billion.

He was one of the few in Las Vegas with plenty of cash on hand during the Great Financial Crisis, using it to purchase Treasure Island from MGM Resorts International for $775 million in December 2008.

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