Bloomberg News

Revel Loan Falls to All-Time Low After Moody’s Ratings Cut

February 11, 2013

Revel Entertainment Group LLC’s debt fell to an all-time low after Moody’s Investors Service reduced its grade on the company last week.

The $900 million loan due in 2017 fell to 38.9 cents today, from 43.7 cents on Feb. 7, according to prices compiled by Bloomberg. The decline comes after Moody’s cut its rating on the Atlantic City, New Jersey-based casino to Caa3, two levels above default.

Revel, which obtained $150 million in financing from lenders in December, is trying to avoid default as it struggles to generate cash since its opening in May. The casino operator disclosed it obtained a fourth amendment to its credit pact today under which lenders agreed to lower its minimum liquidity requirement by as much as $55 million to $20 million from May 16 through July 1, according to a regulatory filing.

“Revel’s capital structure is not sustainable in its current form, and will require a restructuring that involves some level of impairment,” Moody’s analysts led by Keith Foley wrote in a Feb. 5 report. “The company will not be able to achieve targeted business volumes and earnings necessary to cover its fixed charge burden, and that the additional liquidity obtained is not enough to ensure the company’s longer-term viability.”

Casino Revenue

Gambling revenue in Atlantic City for all 12 gaming properties fell 13.2 percent in January, to $205.6 million, the New Jersey Office of the Attorney General said in a statement today. Revel contributed about an $8 million total casino win, ahead of only Trump Plaza’s $4.9 million.

Losses at Revel before interest, taxes, depreciation and amortization for the nine months ended Sept. 30 were $69 million, according to Moody’s.

Maureen Siman, a spokeswoman for Revel, didn’t respond to an e-mail seeking comment.

Standard & Poor’s last month lowered its rating on Revel’s loan to CC and cut its recovery rating to ‘6’ indicating negligible recovery for lenders in the event of default. S&P has a CCC grade on the company.

To contact the reporter on this story: Krista Giovacco in New York at kgiovacco1@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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