ACR Energy Partners Sues to Keep Polo North from Using Equipment inside Revel Casino
ACR Energy Partners, the power company which provides electricity for the Revel Casino, is suing Polo North to keep the casino’s new owners from using any of ACR’s equipment. The lawsuit against Glenn Straub and Polo North Country Club states that any attempt to use such equipment is likely to “cause serious human injury or death”.
The power company, which is the only supplier of energy to the Revel Casino, shut off utility service to the 47-story building last Thursday. That was tow days after Polo North closed a $82 million deal to buy the casino. The two sides have failed to reach a deal on energy costs. Since last Thursday, the Revel Casino Building has been without power.
Straubs Says ACR Energy Is “Desperate”
When asked Tuesday night about the lawsuit, Glenn Straub said that the power company was desperate, because Revel is the company’s only customers. Erin O’Neill of the NJ.com and NJ Advance Media said Straub had suggested ACR Energy Partners could take “their best shot at him.”
Sounding more like a boxing champ than a businessman, Glenn Straub gave a quote to O’Neill, saying, “Let them try. Everybody tries. We’re no stranger to court. Let people try everything they can.”
Polo North was in court last Friday trying to get a state judge force ACR to turn the power to the casino back on. That request was denied. Later, ACR filed to have the state case moved to federal court. On Monday, Polo North sent an eviction notice to ACR Energy Partners, telling them they must vacate the property.
Alternative Energy Sources
At present, Polo North is facing a $5,000 fine per day from Atlantic City, until the developer gets the power restored to Revel Casino. Atlantic City’s acting fire chief, Vincent Granese, wrote a letter stating that a powerless Revel Casino would “create a host of problems and hazards for firefighting operations.”
Glenn Straub has said he plans to connect his new casino to the grid through the old Showboat Casino, which he is in the process of buying. Straub has arranged for portable generator trucks to be brought onto the complex, to power the casino in the meantime and provide relief from fines and possible lawsuits stemming from the kind of scenario Granese spelled out. The plan is to hook up those generators “as soon as possible“.
ACR’s Tuesday Lawsuit
In response, ACR Energy Partners filed its Tuesday lawsuit against Polo North. The suit states it hopes to keep Polo North “from interfering with, connecting equipment to and using the equipment and distribution system owned by ACR Energy.”
Meanwhile, Chief U.S. District Court Judge Jerome Simandle ordered ACR Energy Partners to file papers to show why the case needs to be moved to federal court, instead of the state court system. Those filings must be made by Wednesday. Judge Simandle also plans to hold a hearing to respond to ACR’s request to place a restraining order on Polo North. That request was filed Wednesday.
A Week of Litigation
With dueling lawsuits and moves on the ground at Revel Casino, the two sides clearly are playing hardball. The Revel Casino bankruptcy process has been a complicated legal matter, with four separate possible land deals falling through before Glenn Straub won the bidding on the fifth try. Several bidders gave up hope of Revel Casino because of the high cost of energy offered by ACR Energy Partners.
History of ACR Energy’s Prices
Revel AC, which originally owned Revel Casino, declared bankruptcy and closed the doors in September 2014. Brookfield Asset Management of Toronto won a $110 million bid to own the casino, but pulled out of the process when ACR Energy Partners would not lower the energy costs. ACR Energy Parnters had a contract for $3 million a month in energy and it refused to change the terms of that contract. Brookfield suggested those were outrageous costs and it could not operate the casino for a profit with such costs in place.
Glenn Straub made similar suggestions when he was about to purchase the casino for $94.5 million in January 2015. He and ACR Energy went to court at the time, as Straub tried to get out from under the terms of the deal. That caused the third deal for Revel Casino to fall through.
Third Deal Shuttered Due to Energy Costs
At the last minute in March 2015, New York investors Howard Milstein and Carl Goldberg sought to buy Revel Casino. Their deal to purchase Revel also fell through when Milstein and Goldberg asked the judge to lower the costs ACR Energy Partners was demanding. The judge refused to do so, so the Milstein/Goldberg group pulled out of negotiations.
That left Glenn Straub and Polo North as the last company standing. Straub clearly has a plan to force ACR Energy Partners down from its price, but the energy company, which kept power going during the bankruptcy process (with many complaints), wants the $3 million per month in energy payments.
Dark Horse Supplier: Showboat Casino
Straub appears to have a backup plan involving the Showboat Casino. The possibility of using Showboat emerged only recently, because the casino property had been sold to Stockton University. Trump Entertainment blocked Stockton’s move into the property, though, because of a 1988 covenant signed by three gaming companies that the property never would be used for anything but gaming-related business (not academics).
The Stockton lawsuit caused public protests of Carl Icahn and Trump Entertainment, because the deal had been seen as a godsend for Atlantic City and students wanting to attend Stockton University. But the deal also opened the door for Glenn Straub to purchase the casino property from Stockton University, in what is suggested to be a potential $500 million deal.
If that happens, then Glenn Straub’s plan might be to power Revel Casino with an outside link to the regional power grid. Under those circumstances, ACR Energy Partners might be without a client. Such a turn of events would be a disaster for that company, which explains the lawsuit.
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