Atlantic City’s newest casino – which openedÂ less than a year ago – is filing for bankruptcy, it was announcedÂ today.
Revel, the casino that many people had hopedÂ would turn around the New Jersey city’s flagging fortunes, said it will fileÂ for Chapter 11 bankruptcy protection in March.
The $2.4billionÂ enterprise never caught onÂ as much as expected, and it languished near the bottom of Atlantic City’s 12Â casinos in terms of revenue.
The voluntary, prepackaged bankruptcyÂ envisioned for late March will wipe away about two-thirds of its $1.5billion inÂ debt by converting more than $1billion of it into equity for lenders.
‘Today’s announcement is a positive step forÂ Revel,’ he said.
‘TheÂ agreement we have reached with ourÂ lenders will ensure that the hundreds of thousands of guests who visit RevelÂ every year will continue toÂ enjoy a signature Revel experience in ourÂ world-class facility.’
Existing management will remain in place, noÂ layoffs are planned, and employeesÂ and vendors will be paid as usual, accordingÂ to the company.
Revel had to line up two rounds of additionalÂ financing sinceÂ August to keep operating.
In January, it posted its second-worstÂ month, winning less than $8million from gamblers.
During the second and third quarters of lastÂ year, it reported gross operating losses of $35million andÂ $37million.
Revel’s work force is largely non-union – a fact that earned it the undying enmity of Local 54 of the Unite-HEREÂ union,Â representing most of the city’s casino workers.
‘Over three years ago, Local 54 beganÂ expressing to every elected official in theÂ city, the state and the governor’sÂ office that this project was doomedÂ to failure,’ said Bob McDevitt, the union’sÂ president.
‘Had theyÂ listened to us three years ago, weÂ would not have this catastrophe onÂ our hands now.’
Michael Drewniak, Governor Chris Christie’sÂ press secretary, expressed confidence in Revel.
He said: ‘We are committed to the resurgenceÂ of Atlantic City, the tourism district, and the many efforts currently under wayÂ to bring world-classÂ attractions and entertainment to the city,’ heÂ said.
‘A rejuvenatedÂ Revel will remain an integralÂ part of that landscape, as it continuesÂ full operations as a premiere hotel,Â gaming and top-flight entertainment hub for the city, in addition to employingÂ more than 2,000 people.
‘Most importantly, none of those things thatÂ make Revel among Atlantic City’s highest-profile attractions will change, asÂ Revel uses this newÂ financial flexibility and the continued backing of itsÂ investors to grow the business and be part of Atlantic City’sÂ expansion.’
David Rebuck, director of the state DivisionÂ of Gaming Enforcement, said the Chapter 11 filing needs to happen.
‘The agreement between Revel and its lendersÂ will allow for a necessaryÂ financial restructuring and improve the property’sÂ financial conditionÂ going forward,’ he said.
‘We see this as a positive step that willÂ allow Revel to comprehensively address its financial needs while continuingÂ normal business operations.’
Revel officials have been reviewingÂ theirÂ options in recent months as the Atlantic City market continued toÂ decline andÂ its own revenues remained stuck in neutral.
DeSanctis saidÂ the company and its lendersÂ decided that a prepackaged Chapter 11 wouldÂ be the best way to improve itsÂ balance sheet by eliminating substantialÂ debt and increasing the changes forÂ growth.
As part of the restructuring,Â some ofÂ Revel’s lenders will provide approximately $250million inÂ debtor-in-possessionÂ financing, about $45million of which constitutesÂ new money commitments andÂ approximately $205million of which isÂ pre-petition debt.
No taxpayer funds will be used to finance theÂ restructuring, the casino said.
The company didn’t identify which lendersÂ will be part of the filing; it said only that ‘a majority’ of its lenders haveÂ agreed.