Some of its lenders will provide $250 million in debtor-in-possession financing, approximately $42 million of which constitutes new money commitments.
In addition, Revel's lenders have committed $335 million in exit financing, which consists of a $75 million revolver and $260 million term loan. The proceeds of the exit financing will be used to provide Revel with additional working capital, pay for some capital expenditures, repay the debtor-in-possession financing and pay expenses related to the restructuring when Revel emerges from bankruptcy court, the company said.
Revel opened April 2 with sky-high hopes and the expectation of many in what was then the nation's second-largest gambling market that it could help turn around Atlantic City's sagging fortunes. But Revel has lagged near the bottom of the city's 12 casinos in terms of gambling revenue, and Atlantic City has since lost its position as the nation's No. 2 market to Pennsylvania.
Steve Norton, a casino analyst who was vice president of Resorts when it opened as the first U.S. casino outside Nevada in 1978, said Revel has to reconsider its no-smoking policy and reorient its marketing more to casino players instead of conventioneers. It also is hurt by being a stand-alone property unaffiliated with a larger parent company with an extensive multistate database of customers from which to draw, Norton said.And he also said Revel needs to get real when it comes to food and hotel room prices, which are higher than those of most of its competition. Indeed, just a few hours before filing the bankruptcy petition Monday, Revel sent out a marketing email offering hotel rooms starting at $129 a night during the week, more in line with its lower-cost competitors. "While this would not be a problem for the convention trades, where the attendee is on an expense account, it can be a big negative for the frequent independent traveler, overnight guest and the day tripper, that provides much of Atlantic City's customer base," Norton said. "Revel doesn't have the level of low priced food options like every other Atlantic City casino."