LITTLE FERRY, N.J. (CBSNewYork/AP) - Less than a year after opening, the Revel casino and hotel in Atlantic City has announced it is filing for chapter 11 bankruptcy next month.
“What’s happening is merely a shifting of Revel’s debt load to equity,” said Gov. Chris Christie in Little Ferry on Wednesday.
The way the governor sees it, the lenders who were owed $1.5 billion in debt are now taking ownership in Revel.
As Robin Rieger of KYW-TV, CBS 3 Philadelphia reported, Revel officials said the bankruptcy filing will give the resort $45 million in additional funding, and allow the company to wipe out the debt — giving creditors stake in the company. Visitors won’t see a difference in day to day operations.
New Jersey gave the resort over $250 million in tax credits to complete the project. Officials said no taxpayer funds will be used in the restructuring.
But Kevin DeSanctis, Revel’s chief executive officer, said the restructuring will give the casino resort more flexibility to operate, calling it “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,” he said.
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.
“[The lenders are] showing their faith and confidence in the concept and in the future of Atlantic City by not walking away and closing the place down, but by, in fact, saying ‘We’re going to take the money that we’re owed and instead we’ll take stock in the company,” Christie said.
“This is something that happens at times in business. Certainly the events in the state over the last number of months hasn’t helped,” he said, making reference to superstorm Sandy.
State Senate budget committee chairman Paul Sarlo told WCBS 880 reporter Levon Putney it was clear Revel’s first operators would not profit.
“Clearly, the industry as a whole is still struggling,” Sarlo said.
State Senate President Steve Sweeney (D-West Deptford) said he is disappointed in the bankruptcy filing.
“No one seems to understand the business model of the casino, and it’s not doing very well,” Sweeney said. ”Them filing bankruptcy is not surprising.”
From the day it opened last April, Revel insisted it was a different kind of casino.
It shunned bus-riding day-trippers, banned smoking, hired a mostly non-union workforce and told employees they’d have to reapply for their jobs every five years or so. It concentrated on the well-to-do leisure traveler and the business client instead of the slot-playing granny and opened up views of the ocean with floor-to-ceiling windows in a seaside resort where everyone else sought to keep gamblers focused on gambling.
opened last Monday, and many speak of admiration for its beauty. But opinions are mixed on why it is now filing for bankruptcy.
“Casinos in Pennsylvania and elsewhere are taking business away from Atlantic City,” one person said.
“I think they went too far with it, and can’t catch up with expenses,” another said.
Sarlo added that he’s glad the governor is giving Atlantic City revitalization two and half more years before considering casinos in North Jersey.
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