Judge Gloria Burns voided the sale of Revel Casino to Brookfield Property Management, the Canadian firm which won a bankruptcy auction in October 2014. Brookfield won the auction with a $110 million bid, but later pulled out of the deal when it could not renegotiate ongoing energy payments.
Revel Entertainment made a request this week to have the purchase voided. Brookfield could not resolve a dispute with bondholders over a $3 million per month energy cost made to a local supplier, then made a public announcement it was pulling out of the bargain.
Revel Attorneys Says "Repudiation" Took Place
That was the point Revel attorney John Cunningham made when he went before Judge Burns. Cunningham said of Brookfield, "They had an outside date to close on Nov. 28. They pre-emptively went to the press and announced that they were walking away from this transaction. Quite simply, they have affirmatively repudiated the contract."
Polo North Reenters
Revel Entertainment now wants to sale to the auction's second-leading bidder, real estate development company Polo North, which filed a $95 million bid. Polo North is a Florida-based company controlled by Glenn Straub. Earlier, Polo North collected a $3 million fee as the stalking horse bidder. Straub was the only bidder in the beginning, meaning he would be paid a fee if anyone else came in at the 11th hour to supplant his bid.
Revel's owners said they plan on keeping the $11 million deposit paid to them by Brookfield. Its lawyers said they are entitled to under terms of the contract. Brookfield declined to comment on the deposit.
Glenn Straub's Plans Unknown
It is uncertain at present whether Glenn Straub and Polo North are interested in completing the deal. He has not commented on the latest developments, though he was quite vocal in the Atlantic City media leading up to the auction. After Straub lost the auction, he and his lawyer had been critical of how Revel had conducted it, implying they had unfairly given Brookfield the advantage. Later, Straub had filed a lawsuit to that effect.
If Polo North returns to the picture, it is uncertain what the final fate of Revel Casino will be. Straub had suggested several uses of the impressive-looking skyscraper. He had suggested at one time it might be used as a rail link. Later, he had plans to open a "genius academy" which would discuss the world's problems.
Revel Casino's Sad History
When the Revel Casino opened in April 2012, it was expected to be a signature moment for the Atlantic City casino industry. The $2.4 billion building was offered Vegas-style luxury to Atlantic City gamblers, but the casino was beset with trouble from the beginning. It went through 2 bankruptcies in its 29 months of operation, ending with the second bankruptcy in September 2014. While it's the best-looking building in Atlantic City, Revel Casino is now a symbol of the Boardwalk's faded fortunes.
Resolution on January 5
The auction process will be resolved on January 5th, when Revel Casino and other interested parties go before Judge Burns. The judge told Revel Entertainment, "We've got to get the sale process moving."
The most likely scenario has Glenn Straub's Polo North development company filling the role of buyer. Polo North was the only other bidder in the original bankruptcy auction, posting a $94.5 million bid against the $110 million bid by Brookfield. If Straub would have to pull out of the process before the court date, then Judge Burns likely would call for a new auction process to begin.
Conventional logic says such a process would be a disaster for Revel AC, the company which owns Revel Casino at the moment. Revel cost $2.4 billion to construct, but the price tag fell to $110 million during the auction phase. With the first buyer out of the picture, the price has fallen to $94.5 million. Any other bidders would likely be companies who did not want to match Glenn Straub's stalking horse bid of $90 million.
Therefore, less-than-$90 million appears to be the sell price, if a new auction happened. The price could go much lower than that, so Revel AC might have lost tens of millions of dollars in the current process. For their trouble so far, Revel AC was able to pocket the $11 million deposit by Brookfield Asset Management. Such deposits won't be forthcoming in the future, it would seem, so the owners need to sell the casino and sell it soon.
