ATLANTIC CITY, N.J. (CBSNewYork/AP) – As one Atlantic City casino after another shut down and left thousands of workers jobless, Mayor Don Guardian insisted that the meltdown that claimed four of his city’s 12 casinos since January was actually the opportunity of a lifetime for savvy investors.
On Wednesday, someone finally agreed.
A Canadian asset management company won a bankruptcy court auction for the failed Revel casino hotel and announced plans to re-open it as a casino. Toronto-based Brookfield US Holdings LLC will pay $110 million to buy the 2-year-old casino that cost $2.4 billion to build, adding it to casinos it owns in Las Vegas and the Bahamas.
“These are the first people that realized what I’ve been saying about Atlantic City turning the corner and being a great investment due to the low prices,” Guardian told The Associated Press on Wednesday, hours after the successful bid was announced. “We’ve had a lot of bad news. This is certainly some good news.”
But this being Revel, for which nothing has ever come easily in its 2 1/2-year history, the good news was tempered by concern about the would-be buyers’ financial situation in Las Vegas, where it owns the Hard Rock casino. Brookfield told securities regulators in August that it was unable to make an interest payment due that month, and was trying to work things out with its lenders, who could demand immediate repayment of nearly $1 billion in debt.
Brookfield spokesman Andrew Willis said the negotiations underway for the Hard Rock property will not affect its ability to complete the Revel purchase, which needs to be approved by a bankruptcy court judge on Oct. 7. It also owns the Atlantis Paradise Island casino in the Bahamas.
In an auction that began Tuesday morning and lasted until early Wednesday, an opposing bidder, Florida developer Glenn Straub, was selected as the backup bidder in case Brookfield did not close on the deal.
“Revel is a brand-new trophy asset on the beachfront, which we are acquiring at a substantial discount to replacement cost,” Willis said. “We are excited about owning the newest and highest quality asset in Atlantic City at such an attractive basis.”
He said the company is not ready to reveal specific business plans for Revel, or even whether they will still call it Revel, but confirmed the plan to operate it as a casino-hotel. He could not estimate when the property might re-open.
The would-be owners got an early vote of confidence from the casino workers’ union that bitterly fought the non-union Revel even before it opened. Bob McDevitt, president of Local 54 of the Unite-HERE union, said, “We look forward to sitting down with Brookfield and working out a positive relationship for the workers who were displaced by its closing.”
Revel closed on Sept. 2 after just over two years of operation, one of four Atlantic City casinos to go out of business this year, ending the jobs of 8,000 workers, so far. A fifth, the Trump Taj Mahal, may close on Nov. 13.
The attorney for Straub said the developer has not yet decided whether to challenge the auction’s outcome.
“We have to decide whether we’re going to fight it in court, whether to try to top (Brookfield’s bid), or something else,” Stuart Moskovitz said. “We have to come up with a plan before Tuesday.”
Straub, the Florida developer and polo aficionado had spoken of re-opened Revel as a so-called “genius academy” at which highly intelligent people would tackle the world’s biggest problems. He said the property may or may not have had a casino.
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