Revel AC Inc. (REVEQ:US), whose Atlantic City, New Jersey, casino has been in bankruptcy twice since it opened in 2012, resolved unsecured creditors’ objections to a sale process, and now will see whether any bidders are willing take a gamble on the ailing resort.
Revel and lender Wells Fargo & Co. (WFC:US) today reached a deal with the official committee of unsecured creditors over lenders’ ability to offer debt rather than cash in an auction for the company’s assets. At a hearing in U.S. Bankruptcy Court in Camden, New Jersey, they also agreed on a deadline for submitting offers.
After Revel has negotiated specific language with the creditors and Wells Fargo, it will give U.S. Bankruptcy Judge Gloria M. Burns documents by July 14 so she can formally approve the sale procedures. The company plans to hold an Aug. 7 auction, according to John K. Cunningham, a lawyer for Revel. Bids to take part in the auction must be submitted by Aug. 4.
A good indication of whether Revel will survive or perish will come as early as July 18, when non-binding letters of interest are due.
“In a perfect world we would have plenty of time to sell,” Burns said in court today. “Unfortunately that’s not the case.”
Revel’s bankruptcy, its second in just over a year, comes as Atlantic City casinos face increased competition from gambling venues in neighboring Pennsylvania and Maryland.
Casino revenue in the New Jersey gambling mecca has plummeted more than 40 percent to just over $2.8 billion in 2013 since reaching a yearly high of more than $5 billion in 2006.
Revel opened in April 2012 at a cost of $2.6 billion, only to shut down for five days a few months later because of Hurricane Sandy. It filed a first bankruptcy in March of the following year before seeking creditor protection again last month.
The casino and resort, on Atlantic City’s Boardwalk, has about 130,000 square feet of gaming space, with 2,400 slot machines, 130 table games and a poker room, according to its website. The resort has 1,399 rooms, indoor and outdoor pools, as well as 13 restaurants and night clubs.
Revel, which employs about 3,140 people, told workers last month that it may be forced to close for good if it fails to attract a buyer. The company said their jobs may be terminated as early as Aug. 18 if it can’t sell the business as a going concern. The notice was given to comply with laws that require companies to warn workers of possible mass job cuts.
Wells Fargo is providing as much as $125 million in financing to help fund operations while Revel pursues a sale.
Revel owes about $137 million on secured revolving facilities with JPMorgan Chase Bank NA as agent, according to court papers. It owes about $310 million to lenders under another secured term loan with Wilmington Trust NA as agent.
In its previous trip through bankruptcy, Revel cut its debt by about $1.2 billion, handing ownership of the company to creditors. Chatham Revel VoteCo LLC owns 27.4 percent of the equity, Canyon RC Holdings LLC has a 15.7 percent stake and American High-Income Trust owns 11.5 percent of the company, according to court papers.
The case is In re Revel AC Inc., 14-bk-22654, U.S. Bankruptcy Court, District of New Jersey (Camden). The previous case is In re Revel AC Inc., 13-bk-16253. U.S. Bankruptcy Court, District of New Jersey (Camden).
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