Bankrupt Again, Atlantic City's Revel Casino May Shut DownJune 20, 2014 2:14 pm
On Thursday, Atlantic City’s troubled Revel Casino filed its second Chapter 11 protection in a little over one year and warned that unless a buyer was found which had “the ability to provide the funding and long-term commitment to help Revel reach its full potential,” then the $2.4 billion entertainment resort may have to shut its doors.
When Revel was originally built it was with the intention of upgrading Atlantic City’s declining gaming business to a level comparative with that of Las Vegas. However, the ambitious project soon ran into trouble and after Morgan Stanley pulled out of construction taking a $932 million loss along the way, New Jersey Governor Chris Christie then allocated a $261 million tax package to help complete the project.
Revel then opened its doors in April 2012, but ten months later filed for bankruptcy. In May 2013, it was subsequently able to secure court approval for a restructuring plan which subsequently reduced its debt from $1.503 billion to $272 million. As part of the deal Revel declared the casino’s value had dropped to just $450 million, and forecast no profits until at least 2017.
In the meantime, Revel lost $110 million for the nine months it was open in 2012, followed by $130 million in 2013, and by Q1 2014 had posted a $21.7 million gross operating loss.
The casino is currently owned by a conglomerate of investors who are now keen to part with the huge property. Nevertheless, the $2.4 billion resort is now estimated to be worth a mere shadow of its former price tag with UNITE HERE Local 54, the largest casino workers union in Atlantic City, estimating its value at between $25 million and $73 million.
Local 54 has also pledged to do all it can to save its workers’ jobs, with its president Bob McDevitt, stating: ” A sale of Revel to a buyer who wants to keep the property open and retain the employees is the best thing for the workers, for Atlantic City and for Revel, and Local 54 is committed to working with all parties to save the jobs”
Atlantic City has seen its casino revenues almost halved from their peak of $5.2 billion in 2006, while the US casino industry as a whole has yet to reach the $37.5 billion it generated in 2007.