Atlantic City, NJ – Revel, a casino that was expected to revitalize the city’s economy, said Tuesday that it will be filing for Chapter 11 bankruptcy protection this March, after opening only a little more than 10 months ago.
The voluntary bankruptcy scheduled for March will remove two-thirds of its $1.5 billion debt, effectively converting nearly $1 billion in to equity for its lenders.
Revel’s CEO, Kevin DeSanctis, said that the restructuring would give the casino resort more flexibility to operate.
“Today’s announcement is a positive step for Revel … The agreement we have reached with our lenders will ensure that the hundreds of thousands of guests who visit Revel every year will continue to enjoy a signature Revel experience in our world-class facility,” DeSanctis said.
According to Yahoo! News, Revel isn’t planning any layoffs. Existing management will stay in their current positions and other employees and vendors will be compensated as usual. The company expects that restructuring should be finalized by early summer.
Under the restructuring plan, specific Revel lenders will provide approximately $250 million in debtor-in-possession financing, to include $45 million in new loans, according to Revel.
In terms of casino revenue, the $2.4 billion luxury Revel resort never performed as expected and, in January, actually had the second-lowest gambling revenue among Atlantic City’s 12 resorts.
Based on data provided by Bloomberg, Atlantic City casinos have had a history of debt problems. The Taj Mahal, Donald Trump’s resort, declared bankruptcy in 1990. The city’s Tropicana filed for Chapter 11 with $2.4 billion of debt in 2008, and the Atlantic City Hilton defaulted on a $348.2 million loan in 2012.
Revel, the first new casino built since 2003, opened its doors in April with the hopes of turning the city’s bad fortune around.
Michael Drewniak, Governor Chris Christie’s press secretary, had this to say, “We are committed to the resurgence of Atlantic City, the tourism district, and the many efforts currently under way to bring world-class attractions and entertainment to the city … A rejuvenated Revel will remain an integral part of that landscape, as it continues full operations as a premiere hotel, gaming and top-flight entertainment hub for the city, in addition to employing more than 2,000 people. Most importantly, none of those things that make Revel among Atlantic City’s highest-profile attractions will change, as Revel uses this new financial flexibility and the continued backing of its investors to grow the business and be part of Atlantic City’s expansion.”