A new Atlantic City casino is already planning to file for bankruptcy. Revel had a lot of promise when it opened last year but the new casino announced that it will file for Chapter 11 bankruptcy protection in March.
The bankruptcy protection will help get rid of two-thirds of the casino's $1.5 billion debt by converting $1 billion of it into equity for lenders, which many believe will benefit the not-so-successful business, the Associated Press reports.
Kevin DeSanctis, Revel's CEO, believes the protection will allow the casino to have more flexibility and will allow it to stay open.
"Today's announcement is a positive step for Revel," DeSanctis told AP. "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."
Not much is expected to change for the company during this time. The current management will remain and there are no planned layoffs or paycuts. This restructuring is expected to be complete by the early summer, which is a peak season for Atlantic City casinos.
There were high expectations for the $2.4 billion casino but it didn't do as well as people thought. As far as revenue goes, it is towards the bottom of AC's 12 casinos. The casino had to ask for two rounds of additional funding to keep it operating in August. Many guests found the hotel rooms and restaurants to be too pricey.
The casino reported operating losses of $35 million and $37 million in the second and thurd quarters last year. During its second worst month in January, the casino only gained $8 million from gamblers.
Revel's workers don't belong to a union, which Local 54 says was part of the reason the casino failed.
"Over three years ago, Local 54 began expressing to every elected official in the city, the state and the governor's office that this project was doomed to failure," Bob McDevitt, the union's president told AP. "Had they listened to us three years ago, we would not have this catastrophe on our hands now."
New Jersey Governor Chris Christie is determined to keep Revel and all of the Atlantic casinos going.
"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," Michael Drewniak, Gov. Chris Christie's press secretary said. "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."
David Rebuck, director of the state Division of Gaming Enforcement believes the Chapter 11 bankruptcy protection is necessary for the new casino.
"The agreement between Revel and its lenders will allow for a necessary financial restructuring and improve the property's financial condition going forward," he said. "We see this as a positive step that will allow Revel to comprehensively address its financial needs while continuing normal business operations."
Revel officials have been reviewing their options in recent months as the Atlantic City market continued to decline and its own revenues remained stuck in neutral. DeSanctis said the company and its lenders decided that a prepackaged Chapter 11 would be the best way to improve its balance sheet by eliminating substantial debt and increasing the changes for growth.
Revel isn't the only Atlantic City casino to file for Chapter 11 bankruptcy.
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