Atlantic City’s newest casino – which opened less than a year ago – is filing for bankruptcy, it was announced today.
Revel, the casino that many people had hoped would turn around the New Jersey city’s flagging fortunes, said it will file for Chapter 11 bankruptcy protection in March.
The $2.4billion enterprise never caught on as much as expected, and it languished near the bottom of Atlantic City’s 12 casinos in terms of revenue.
The voluntary, prepackaged bankruptcy envisioned for late March will wipe away about two-thirds of its $1.5billion in debt by converting more than $1billion of it into equity for lenders.
‘Today’s announcement is a positive step for Revel,’ he said.
‘The agreement we have reached with our lenders will ensure that the hundreds of thousands of guests who visit Revel every year will continue to enjoy a signature Revel experience in our world-class facility.’
Existing management will remain in place, no layoffs are planned, and employees and vendors will be paid as usual, according to the company.
Revel had to line up two rounds of additional financing since August to keep operating.
In January, it posted its second-worst month, winning less than $8million from gamblers.
During the second and third quarters of last year, it reported gross operating losses of $35million and $37million.
Revel’s work force is largely non-union – a fact that earned it the undying enmity of Local 54 of the Unite-HERE union, representing most of the city’s casino workers.
‘Over three years ago, Local 54 began expressing to every elected official in the city, the state and the governor’s office that this project was doomed to failure,’ said Bob McDevitt, the union’s president.
‘Had they listened to us three years ago, we would not have this catastrophe on our hands now.’
Michael Drewniak, Governor Chris Christie’s press secretary, expressed confidence in Revel.
He said: ‘We are committed to the resurgence of Atlantic City, the tourism district, and the many efforts currently under way to bring world-class attractions and entertainment to the city,’ he said.
‘A rejuvenated Revel will remain an integral part of that landscape, as it continues full operations as a premiere hotel, gaming and top-flight entertainment hub for the city, in addition to employing more than 2,000 people.
‘Most importantly, none of those things that make Revel among Atlantic City’s highest-profile attractions will change, as Revel uses this new financial flexibility and the continued backing of its investors to grow the business and be part of Atlantic City’s expansion.’
David Rebuck, director of the state Division of Gaming Enforcement, said the Chapter 11 filing needs to happen.
‘The agreement between Revel and its lenders will allow for a necessary financial restructuring and improve the property’s financial condition going forward,’ he said.
‘We see this as a positive step that will allow Revel to comprehensively address its financial needs while continuing normal business operations.’
Revel officials have been reviewing their options in recent months as the Atlantic City market continued to decline and its own revenues remained stuck in neutral.
DeSanctis said the company and its lenders decided that a prepackaged Chapter 11 would be the best way to improve its balance sheet by eliminating substantial debt and increasing the changes for growth.
As part of the restructuring, some of Revel’s lenders will provide approximately $250million in debtor-in-possession financing, about $45million of which constitutes new money commitments and approximately $205million of which is pre-petition debt.
No taxpayer funds will be used to finance the restructuring, the casino said.
The company didn’t identify which lenders will be part of the filing; it said only that ‘a majority’ of its lenders have agreed.