Atlantic City Revel gets $1.23 Billion Debt Reduction
Since opening 13 months ago, the Atlantic City Revel has been an unmitigated disaster. The $2.5 billion casino resort has struggled to pull in revenue and was saddled with $1.52 billion in debt. However, the Revel got a major break in court this week as their debt was reduced to $272 million.
U.S. Bankruptcy Judge Judith H. Wizmur presided over the case and ruled that lenders would take over 82% of the casino. In exchange, the Revel’s debt would fall to $272 million and give them a “reasonable prospect for success in the future,” according to Judge Wizmur.
Revel’s interim, CEO Jeffrey Hartmann, was quite pleased with the decision. “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,” he said.
Another stipulation of the the bankruptcy settlement involves Revel’s annual interest payments falling from $102 million to $46 million. With their interest payments now halved, casino owners want to put their extra money towards improving amenities and entertainment options.
The Atlantic City Revel filed for Chapter 11 bankruptcy in March of 2013. At the time, Revel had $1.5 billion in debt against only $1.1 billion in assets. Furthermore, they weren’t even earning enough monthly revenue to cover their interest payments and bills. This being the case, bankruptcy reorganization was the best option for keeping the casino open.
The Revel’s struggles exemplify what’s been an even larger problem across Atlantic City. Once the United State’s second biggest casino gaming destination, AC has now fallen behind the state of Pennsylvania in terms of revenue. AC has struggled mightily due to new competition from surrounding cities like Philadelphia and New York.
Many people within the beleaguered city had hoped that the Revel would be a huge draw and help turn things around. After all, the mega casino resort features 2,400 slot machines, 130 tables, 1,400 hotel rooms and 11 restaurants. However, many of these attributes have remained fairly empty over the past year.