Revel Purchase Dropped After Dispute Over Electricity Payments
November 20, 2014 4:12 pmAt the beginning of October, Brookfield Asset Management won an auction to buy Atlantic City’s Revel Casino for $110 million, in the process trumping an earlier bid made by Florida developer Glenn Straub of $95.4 million. Now Brookfield appears to have walked away from the deal, and potentially its $10 million deposit, following a dispute over how much the company would have been expected to pay to the utility plant next door which provides water and electricity to the casino resort.
Apparently, Revel already had a contract in place with ACR Energy Partners LLC to purchase power and utility services for $3 million a month, with ACR having previously borrowed $118.6 million on the bond market to build the utility plant. Following the latest break down in negotiations, Brookfield Asset Management said that it had now “terminated the Revel acquisition, and commenting on the matter, Atlantic City Mayor Don Guardian, said:
“I am sorry to hear that the Brookfield transaction was not completed. Although Brookfield would have been a good fit for Atlantic City, we will continue to attract new investors.”
Nevertheless, bankruptcy auction runner-up, Glenn Straub, says he is still interested in purchasing the Revel, and referring to the breakup fee he would have received had the Brookfield sale been completed, said; “We didn’t go through all this procedure to make $3 million.”
The Revel Casino resort was opened in April 2012 at a cost of $2.4 billion, and was touted as a cure for Atlantic City’s declining gambling industry. The huge complex complete with 1,800 hotel rooms, 14 restaurants, theaters and nightclubs provided employment for around 3,100 staff, but unfortunately the business never turned a profit, and shut its doors on September 2, 2014.
Revel’s dramatic failure, however, is systematic of the challenges facing the beleaguered gambling resort of Atlantic City as a whole, and this year just 7 of its original 12 casinos are expected to survive, with the Atlantic Club already closed, and the Showboat, the Trump Taj Mahal and Trump Plaza all expected to follow suit.