When the huge Revel Casino complex in Atlantic City opened on April 2, 2012, with a 1,800-room hotel, theaters, 14 restaurants, 2400 slot machines and almost 100 table games, they thought it was going to become the top grossing casino in Atlantic City. However, the gamblers had other plans.
While Borgata remained the top grossing casino in the city backed by MGM Resorts International and Boyd Gaming, Borgata had opened in 2003. Revel’s year of opening with the throes of the recession still going on was hardly good timing. And the gambling crowd it hoped to attract went to the adjacent state of Pennsylvania instead, making Pennsylvania the second-largest U.S. gambling market.
So, long story short, within close to a year of opening, the Revel Casino has filed for bankruptcy protection on Monday to wipe off more than $1 billion debt and hand over control to lenders. Under the Chapter 11 filing, Revel will cut its debt down to $272 million from about $1.52 billion. The plan has already secured the number of lender’s votes required for court approval.
Jeffrey Hartmann, the interim CEO of Revel, said in a statement, “Backed by overwhelming lender support, we remain on track to complete our financial restructuring ahead of the critical summer season.”
Revel would be continuing its regular business operations while the financial restructuring takes place.
The principal lenders, including Canyon Capital Advisors and Chatham Asset Management would become the new owners once the Chapter 11 proceedings are concluded.
The earliest fund behind Revel Entertainment Group LLC had been Morgan Stanley, which sold its stake for a $932 million loss after partially completing the building. Ultimately, the complex took about $2.4 billion to build. But it did not bring the glitz it promised to Atlantic City.
A group of investors led by Kevin DeSanctis had bought Morgan Stanley’s stake. For completing rest of the project, the new owners received a tax package of about $261 million from the state of New Jersey and obtained another $1.15 billion of financing.
Earlier this month, DeSanctis resigned from his post as the chief executive of Revel.