New Jersey's newest casino is declaring bankruptcy. If the structured settlement works as planned, it will erase about two-thirds of its $1.5 billion in debt.
The Revel, the newest casino in Atlantic City, N.J., announced today that it will file for Chapter 11 in March, less than a year after opening. Many had hoped the bankrupt casino would turn around Atlantic City's sagging fortunes.
Wayne Parry / AP / File
EnlargeRevel, the new casino?many people had hoped would turn around Atlantic City's sagging fortunes, said Tuesday that it will file for Chapter 11 bankruptcy protection in March, less than a year after it opened.
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The voluntary, prepackaged bankruptcy envisioned for late March will wipe away about two-thirds of its $1.5 billion in debt by converting more than $1 billion 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," DeSanctis 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, the company said. The restructuring should be completed by early summer, it added.
The $2.4 billion?casino?never caught on as much as it had expected to, and it remained mired toward the bottom of Atlantic City's 12?casinos?in terms of?casino?revenue. 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 $8 million from gamblers. During the second and third quarters of last year, it reported gross operating losses of $35 million and $37 million.
Revel's work force is largely nonunion, 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, Gov. Chris Christie's press secretary, expressed confidence 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," 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."
Source: http://rss.csmonitor.com/~r/feeds/csm/~3/42sTyUZYgxY/New-casino-bankrupt-There-goes-Atlantic-City
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