"This is a prepackaged bankruptcy that the lenders are on board with," said gaming-industry analyst Joe Weinert of Spectrum Gaming Group L.L.C. in Linwood. "This is good news for Revel. Creditors will trade debt for equity; the property will have a lot more financial flexibility and be able to enhance its marketing punch to help it make significant revenues in gaming, as well as non-gaming revenues."
The bankruptcy, announced Feb. 19, came after months in which Revel finished near the bottom for total gaming revenue among the dozen casinos here. It opened only last April.
As part of the restructuring, Revel's lenders will provide about $250 million in debtor-in-possession financing, about $45 million of which is new money. The reduction of about $1 billion of its $1.3 billion in debt, the lenders say, will greatly improve Revel's cash flow and relieve the burden of onerous interest payments.
Revel's new interim CEO, Jeffrey Hartmann, a former chief executive at Mohegan Sun Casino Resort in Connecticut, received regulatory approvals Tuesday to start the job, replacing Kevin DeSanctis, who stepped down.
In an interview this week, Hartmann said that "rightsizing Revel's balance sheet" is a priority, as is improving the customer experience.
"The prepackaged Chapter 11 case will . . . position us for long-term success, with the financial capacity to pursue amenity-enhancement opportunities," he said.
Those familiar with the reorganization plan Revel will submit to U.S. Bankruptcy Judge Judith Wizmur say it includes schematics for a smoking area to help boost gaming business.
As the first fully nonsmoking casino in Atlantic City, Revel has taken much heat. The stance on smoking worked to Revel's detriment, since a majority of gamblers smoke, critics say, and they have blamed it in part for dismal monthly casino revenues. Built at a cost of $2.4 billion, Revel generated just $9 million from slots and table games last month.
Revel received more than $300 million in state assistance toward its completion and has had the continued support of Gov. Christie, who created a state-run tourism district here last year and has repeatedly said the casino's success is critical to a five-year revitalization plan for Atlantic City.
Some Wall Street gaming analysts, though, argue that what is really needed at Revel - a single Shore property without a sister casino anywhere - is for an experienced casino operator with a national database to purchase equity in it.
Should Revel end up on the auction block post-summer, among those circling and reportedly expressing interest are Penn National Gaming Inc., which is competing for the second Philadelphia casino license, and Neil Bluhm, the Chicago billionaire who owns SugarHouse on Penn's Landing and Rivers in Pittsburgh.
A Penn National spokesman said, "As a policy matter, we can't comment on new business opportunities we may or may not be pursuing."
But Bluhm, who rescued Rivers from bankruptcy in August 2008 and became majority owner, was more forthcoming. Greg Carlin, who works for Bluhm as chief executive of both SugarHouse and Rivers, said, "We generally get involved with a project during the development phase, but I do think that Revel is an exceptional property that over the long run will reset the bar and lead Atlantic City's revitalization."
Analyst John Kempf of RBC Capital Markets L.L.C. said Bluhm's interest in Revel made sense strategically.
"Having an Atlantic City property to complement an existing Pennsylvania property could make good sense," Kempf said. "Someone can offer a second property nearby, especially for customers who vacation on the Jersey Shore.
"An existing customer database could also help to quickly ramp up Revel's business," he said. "At the end of the day, however, it will all be about valuation, and that's the tough part to figure out."
Kempf was referring to the low prices existing casinos and land have recently fetched in Atlantic City.
Last month, Trump Plaza announced that it had been sold to Meruelo Gaming Holdings L.L.C. for $20 million. Las Vegas-based Pinnacle Entertainment Inc. reported selling its 19 acres along the Boardwalk for $30.6 million after paying $270 million for the site in 2006.
For the first time, Atlantic City's gross gaming revenue for the last 12 months has fallen below $3 billion. Revel was supposed to reverse a six-year skid.
"It speaks somewhat to the psyche of Atlantic City," Weinert said. "New Jersey is just another big gaming market, as opposed to being a real rival to Las Vegas."
Wednesday night, as he worked a penny slot on a largely empty gaming floor at Revel, retired Reading steelworker David Roslin picked the 6.2-million-square-foot casino resort apart:
Too big, too empty, not enough staff, no buffet, no smoking, lousy marketing.
"There's a lot of space that's just sitting empty on any given night," said 67-year-old Roslin, who stayed at Revel with his wife for two nights. "Maybe they need to close off certain areas on some nights to save on electricity, heating, and maintenance.
"They tried to appeal to a clientele that exists but isn't strong," he said. "Instead of targeting five millionaires that come once a month, maybe they should go for a million non-millionaires who come once a week."
Contact Suzette Parmley at 215-854-2855 or firstname.lastname@example.org.