Revel's Debt Reduced From $1.52bn To $272mMay 14, 2013 3:54 pm
Atlantic City’s beleaguered Revel casino is now looking forward to a new beginning after a bankruptcy court approved the casino’s Chapter 11 reorganization plan which effectively cuts its debts by a massive $1.2 billion.
The $2.5 billion casino resort opened 13 months ago, but in March this year filed for bankruptcy declaring $1.5 billion in debts but only $1.1 billion worth of assets. Under the new agreement lenders have been granted 82% ownership of the resort in return for reducing Revel’s debt to $272 million, with U.S. Bankruptcy Judge Judith H. Wizmur subsequently concluding that Revel now had a “reasonable prospect for success in the future.”
Following the Judges decision, Revel’s interim CEO Jeffrey Hartmann said: “We look forward to officially emerging from Chapter 11 by the end of this month with a right-sized balance sheet and a significant reduction in our annual interest expense.”
Previously, Revel had to pay $102 million in annual interest payments, a figure that has now fallen to $46 million. Revel said it plans on putting the debt reduction money towards operations and driving growth by expanding its range of amenities and programmes.
Over the past few years, Atlantic City casinos have struggled from increased competition from neighbouring states, such as Philadelphia, and it was hoped that the $2.5 billion Revel would prove instumental in helping attract visitors back to Atlantic City. Nevertheless, despite its 2,400 slot machines, 130 table games, 1,399 rooms, 11 restaurants and two night clubs, the casino has ranked near the bottom of the City’s 12 casinos in terms of revenue since opening.