Revel AC Inc., owner of an Atlantic City, New Jersey, casino that opened in April, filed for bankruptcy after reaching an agreement with lenders on a debt-for-equity swap.
Revel listed $1.1 billion in assets and $1.5 billion in debt in a filing yesterday in U.S. Bankruptcy Court in Camden, New Jersey. It asked U.S. Bankruptcy Judge Judith H. Wizmur to schedule a May 13 hearing on the lender-backed reorganization plan. When enough creditors support a so-called prepackaged bankruptcy, companies can exit Chapter 11 more quickly than normal.
Revel said in a statement yesterday that it plans to complete the restructuring before summer. Under the pre-negotiated bankruptcy, lenders agreed to a plan that will cut Revel’s debt by more than 82 percent to $272 million from $1.52 billion, the company said. The lenders also agreed to provide about $250 million in so-called debtor-in-possession financing, according to the statement.
“Revel’s debt burden, in the context of numerous broader challenges facing the Atlantic City casino market and certain startup issues unique to Revel, has proven unsustainable,” the company said in the Chapter 11 filing.
Casinos in Atlantic City have struggled with competition from new gambling venues in Philadelphia about 60 miles (97 kilometers) away and a weak economy. Wizmur also oversaw the bankruptcy of Trump Entertainment Resorts Inc., the Atlantic City casino company named after, and once partly owned by, Donald Trump.
Revel, Atlantic City’s first new casino since 2003, opened in April at a cost of $2.6 billion before being closed for five days starting Oct. 28 because of Hurricane Sandy. Gambling revenue in Atlantic City fell 13 percent in January to $205.6 million, the New Jersey Attorney General’s Office said in a Feb. 11 statement.
The Revel casino and resort, on Atlantic City’s Boardwalk, has about 130,000 square feet of gaming space, with 2,400 slot machines, 130 table games and a poker room, according to the bankruptcy filing. The resort has 1,399 rooms, indoor and outdoor pools, 11 restaurants, two night clubs and a 5,500-seat theater. The resort employs about 5,500 people.
Under the restructuring plan, creditors will swap debt for equity and Revel Group will no longer own the casino, the company said earlier this month. Revel Group will keep in place a licensing agreement so the casino can continue to use the Revel name, the company said.
The restructuring plan won approval of more than three-quarters of claim holders under various credit agreements, Revel said in the bankruptcy filing yesterday.
“Backed by overwhelming lender support, we remain on track to complete our financial restructuring ahead of the critical summer season,” Jeffrey Hartmann, Revel’s interim chief executive officer, said in yesterday’s statement.
Revel appointed Hartmann, a gambling consultant, to the CEO post on March 13 to run the company as it reorganizes. Revel Chairman Kevin DeSanctis gave up day-to-day operations and remains CEO and chairman of Revel’s holding company, Revel Group.
Kirkland & Ellis LLP is Revel’s legal adviser in connection with the restructuring. Alvarez & Marsal Inc. is the restructuring adviser, and Moelis & Co. is the investment banker.
Revel had the second-lowest gambling revenue among the market’s 12 resorts in January, according to data from the New Jersey Division of Gaming Enforcement compiled by Bloomberg Industries analysts.
Revel has struggled to generate revenue to cover its interest costs since it opened. The company received $150 million in additional funding from lenders in December to help back its gaming projects.
The casino project was the centerpiece of Governor Chris Christie’s efforts to revitalize gambling in the state after six years of decline. Christie, a Republican in his first term, jump-started the project with $261 million in state tax incentives.
The case is In re Revel AC Inc., 13-16253. U.S. Bankruptcy Court, District of New Jersey (Camden).