A new casino bankruptcy is in the works in Atlantic City, N.J., and it involves Revel filing for Chapter 11, according to reports.
Revel, which many hoped would reverse Atlantic City's declining fortunes, announced on Tuesday after reviewing its options in recent months that it will file for Chapter 11 bankruptcy protection in March. Their decision comes less than a year after it opened in April as the first new casino built in Atlantic City since the Borgata Hotel Casino & Spa that opened in 2003.
"Today's announcement is a positive step for Revel," said Revel's CEO Kevin DeSanctis. "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."
The new casino bankruptcy -- a voluntary, prepackaged bankruptcy -- will wipe away about two-thirds of a $1.5 billion debt by converting more than $1 billion of it into equity for lenders. Existing management will remain intact, no layoffs are planned, employees and vendors will be paid as usual and no taxpayer funds will be used to finance the restructuring, which DeSanctis said should be completed by early summer and will give Revel more flexibility to operate.
Some of Revel's lenders, whom the casino didn't identify, will also provide approximately $250 million in debtor-in-possession financing, about $45 million of which is made up of new money commitments and approximately $205 million of which is pre-petition debt.
Michael, Gov. Chris Christie's press secretary, remained confident in Revel.
"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," Drewniak 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."
Revel, which cost $2.4 billion, never really was as successful as it was expected to be, among Atlantic City's bottom 12 casinos regarding casino revenue. In January, it posted its second-worst month in its brief existence, winning less than $8 million from gamblers. During the second and third quarters of 2012, it reported gross operating losses of $35 million and $37 million.
It is the latest in a series of recent bankruptcies involving Atlantic City casinos. Trump Entertainment Resorts emerged in 2010 from the third Chapter 11 bankruptcy that it or its corporate predecessors had filed, and the Tropicana Casino and Resort was sold that same year out of bankruptcy court to billionaire Carl Icahn.
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