US casino Revel to file for Chapter 11
APATLANTIC CITY, New Jersey--Revel, the casino many people had hoped would turn around Atlantic City's sagging fortunes, said Tuesday that it will file for Chapter 11 bankruptcy protection in March, less than a year after opening.
February 21, 2013, 12:04 am TWN
The voluntary, pre-packaged bankruptcy envisioned for late March will wipe away about two-thirds of its US$1.5 billion in debt by converting more than US$1 billion of it into equity for lenders.
Kevin DeSanctis, Revel's CEO, said the restructuring will give the casino resort more flexibility to operate.
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, it added.
The US$2.4 billion casino never caught on as much as it had expected to, and it remained mired toward the bottom of Atlantic City's 12 casinos in terms of casino revenue. Revel had to line up two rounds of additional financing since August to keep operating.
In January, it posted its second-worst month, winning less than US$8 million from gamblers. During the second and third quarters of last year, it reported gross operating losses of US$35 million and US$37 million.
Revel officials have been reviewing their options in recent months as the Atlantic City market continued to decline and its own revenues remained stuck in neutral. DeSanctis said the company and its lenders decided that a prepackaged bankruptcy would be the best way to improve its balance sheet by eliminating substantial debt and increasing the changes for growth.
It is the latest in a series of recent bankruptcies involving Atlantic City casinos. Trump Entertainment Resorts emerged in 2010 from the third bankruptcy that it or its corporate predecessors had filed, and the Tropicana Casino and Resort was sold that same year out of bankruptcy court to billionaire Carl Icahn.