New casino bankrupt: There goes Atlantic City? (+video)
New Jersey's newest casino is declaring bankruptcy. If the structured settlement works as planned, it will erase about two-thirds of its $1.5 billion in debt.
ATLANTIC CITY, N.J.
Revel, the new casino many people had hoped would turn around Atlantic City's sagging fortunes, said Tuesday that it will file for Chapter 11 bankruptcy protection in March, less than a year after it opened.
The voluntary, prepackaged bankruptcy envisioned for late March will wipe away about two-thirds of its $1.5 billion in debt by converting more than $1 billion of it into equity for lenders.
Kevin DeSanctis, Revel's CEO, said the restructuring will give the casino resort more flexibility to operate.
"Today's announcement is a positive step for Revel," DeSanctis said. "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."
Existing management will remain in place, no layoffs are planned, and employees and vendors will be paid as usual, the company said. The restructuring should be completed by early summer, it added.
The $2.4 billion casino never caught on as much as it had expected to, and it remained mired toward the bottom of Atlantic City's 12 casinos in terms of casino revenue. Revel had to line up two rounds of additional financing since August to keep operating.
In January, it posted its second-worst month, winning less than $8 million from gamblers. During the second and third quarters of last year, it reported gross operating losses of $35 million and $37 million.
Revel's work force is largely nonunion, a fact that earned it the undying enmity of Local 54 of the Unite-HERE union, representing most of the city's casino workers.
"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," said Bob McDevitt, the union's president. "Had they listened to us three years ago, we would not have this catastrophe on our hands now."