Revel has languished near the bottom of Atlantic City's 12 casinos in terms of gambling revenue since opening on April 2, 2012. It posted gross operating losses of $35 million and $37 million in the second and third quarters of last year, and hundreds of millions of dollars in extra financing last year was not enough to get Revel through the winter.
The decision to file for bankruptcy was made in early February after lenders indicated they were unwilling to put any more money into Revel without a substantial reduction in its debt.
The deal, agreed to in advance by a majority of lenders, will eliminate most of Revel's debt by converting it into equity in the resort for lenders.
Some of its lenders will provide $250 million in debtor-in-possession financing, approximately $42 million of which constitutes new money commitmentsIn addition, 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. Both sides will make a first appearance in bankruptcy court in Camden on Wednesday afternoon. 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 needed 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.