Revel Atlantic City Comes Out of Chapter 11
Revel is Atlantic City’s newest casino and is also among its worst-performing in terms of revenue, a fact that the management of the property hopes will change now that the casino has emerged from Chapter 11 bankruptcy protection. Having only filed for bankruptcy in late March, the quick emergence can be attributed to the fact that Revel had a pre-arranged debt for equity deal set up with its creditors.
Debt reduced, cash flow increased
Under the terms of the bankruptcy agreement, Revel’s creditors now have an 82 percent equity share in the property. In return, Revel’s debt load has been reduced to about $272 million from $1.5 billion. The ailing casino will also have access to cash to help it regain footing.
Open just since April of 2012, Revel lost over $100 million in its first year of operation. It cost a whopping $2.4 billion to construct. As part of its effort to re-make its image and its bottom line, Revel will be adjusting its prices downward to appeal to the standard Atlantic City gambler and will soon allow smoking, as well.
Dennis Stogsdill, Revel’s chief restructuring officer, noted that the property does not expect to turn a profit until sometime in 2014, but still expressed optimism for Revel’s future, saying, “This is truly a monumental day for Revel. Thanks to the support of our lenders and the dedication of our fantastic employees, we have completed a transformational financial restructuring not only successfully, but in time for the important summer season.”
“With a right-sized balance sheet, reduced debt load and improved cash flow, we have emerged from this process stronger and better positioned for success,” Stogsdill went on to add.
Will PokerStars take an interest in Revel?
There may be a new opportunity on the horizon for the struggling Revel, as some observers have speculated that online poker behemoth PokerStars may take an interest in acquiring the property now that its deal to take over another beleaguered New Jersey casino, the Atlantic Club Casino Hotel, has failed.
Last week a judge ruled against PokerStars, upholding the Atlantic Club’s termination of the purchase deal. PokerStars had been in negotiations to take over the casino since late last year, having already paid $11 million toward a $15 million purchase price at the time the deal essentially timed out in late April. PokerStars had sought a restraining order to prevent the Atlantic Club from entertaining other purchase offers, however now that that has been struck down it is possible that the Atlantic Club will be sold to another party.
While it remains to be seen what PokerStars’ next move might be, after last week’s judgement Eric Hollreiser, a spokesperson for the company, said, “We are reviewing today’s ruling. We remain committed to New Jersey and to contributing to its economy.”
With casino comes opportunity for online gambling license
There are many in Atlantic City who saw the PokerStars deal as something of a last hope for the ailing Atlantic Club, as the company had promised to restore the casino to its former glory while preserving its 1,800 jobs in the process. For its part, PokerStars would have gained enormously from the deal by securing entry into New Jersey’s newly-regulated online gambling market.
New Jersey became the third state to regulate some form of Internet wagering when Governor Chris Christie signed the state’s online gambling bill into law at the end of February. It joined Nevada and Delaware in permitting residents to place wagers from their home computers or mobile devices, however so far Nevada is the only state to have an operational online poker site. Delaware and New Jersey are expected to roll out real money online gambling sites sometime this fall.
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