New Casino Bankruptcy: Christie-Backed Revel Files Chapter 11

Wednesday, 20 Feb 2013 08:27 AM

By Michael Mullins

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The company that owns the most expensive New Jersey casino ever built announced it will be filing for chapter 11 bankruptcy protection.

The Revel Atlantic City, a 6.3-million-square-foot operation that opened just 10 months ago, was forced into restructuring due to a series of disappointing months in which its total revenue amounted to a fraction of the $30 million required to sustain itself, reported.

When it opened along the northern end of the Boardwalk on April 2 the Revel was greeted with fanfare from New Jersey politicians, particularly Republican Gov. Chris Christie, who called it "a game-changer for Atlantic City."

Having cost $2.4 billion to build, the Revel was awarded more than $300 million in assistance from the State of New Jersey, of which $261 million were state tax credits.

Through the chapter 11 filing, the struggling casino will be provided with approximately $250 million in debtor-in-possession financing. There will be no taxpayer funds going toward the restructuring effort announced on Tuesday.

The Revel's current debt is approximately $1.2 billion, according to analysts, who noted that the much hyped casino, which touted its high-end amenities and smoke-free gaming halls, is not generating enough revenue to pay off the interest on its bonds.

The Revel finished in 11th place among Atlantic City casinos in January, having generated just $8 million in total casino revenue.

According to a statement from Revel, normal business operations will proceed during the restructuring process: "All services, dining, scheduled entertainment, programming, and events will move forward without change or interruption, and employees and vendors will be paid in the normal course of business."

Christie himself hasn't spoken about the bankruptcy announcement, but his press secretary, Michael Drewniak, issued a statement:

"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."

The news of the Revel's bankruptcy comes less than one week after Trump Plaza, the former centerpiece of billionaire Donald Trump's Atlantic City empire, was sold for a mere $20 million.

In recent years Atlantic City has seen significant revenue declines since Pennsylvania decided to legalize casino table games in 2010.

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