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.

Kevin DeSanctis, Revel’s CEO, said the  restructuring will give the casino resort more flexibility to  operate.

‘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.


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