Judge gives final OK to $250M in Revel financing

Revel's reorganization plan includes a new smoking section, moderately priced restaurants, and a VIP slots lounge.
Revel's reorganization plan includes a new smoking section, moderately priced restaurants, and a VIP slots lounge. (ELIZABETH ROBERTSON / Staff Photographer)
Posted: April 20, 2013

A U.S. bankruptcy judge gave the final go-ahead Thursday to Revel's request for $250 million in debtor-in-possession financing to cover the struggling Atlantic City casino's expenditures after it emerges from Chapter 11.

"I approve the financing. I see no reason not to move forward," Judge Judith Wizmur said during a second hearing on the prepackaged petition filed by Revel AC Inc. in U.S. Bankruptcy Court in Camden.

Wizmur gave interim approval March 27. She is expected to rule on Revel's restructuring plan May 13.

The casino filed for Chapter 11 on March 25, virtually on the eve of its first birthday, after several consecutive months of dismal gambling returns. To obtain infusions of cash, Revel already had three amendments to its credit since its April 2, 2012, opening, but because the casino was generating so little revenue, it still missed a January interest payment on its bonds.

Critics say Revel has failed to attract a following because of its no-smoking policy, its dearth of affordable food (no buffet), and its unwieldy design.

The reorganization plan submitted to Wizmur addresses those issues. It includes schematics for a new smoking section, moderately priced restaurants, and a VIP slots lounge. The plan also aims to wipe out about $1.3 billion of Revel's $1.5 billion in debt through a debt-for-equity swap with creditors.

The $250 million debtor-in-possession financing includes $42 million in new money that the casino hopes to put toward marketing, capital investment, and other expenses.

Revel's attorneys are pushing for the bankruptcy to be completed within 60 days, by or before May 31, the start of the Shore's peak season.

"We're pleased," attorney Marc Kieselstein of Kirkland & Ellis L.L.P. in New York, who is representing Revel's lenders, said after Thursday's hearing. "We're moving on to May 13."

On Wednesday, Revel's interim chief executive, Jeffrey Hartmann, announced that the casino would lay off 83 workers, 2.5 percent of its 3,300 employees. He cited low business volume as the reason.

Patronage has not returned to pre-Hurricane Sandy levels, he said, necessitating the workforce reductions. Hartmann said he wanted to relaunch the casino in mid-May, about the same time Revel emerges from bankruptcy.

On Thursday, Wizmur granted final orders to the motions approved March 27, enabling Revel to continue to pay employee wages and vendors and maintain operations throughout the bankruptcy.

She also approved a settlement between Revel and Atlantic City over unpaid property taxes. City officials claimed in November that Revel owed $12 million in overdue property taxes. The two sides worked out a deal under which tax assessments for 2011 and 2012 will remain at their original levels, and assessments for 2013 through 2015 will be set at $1.15 billion per year.

In a statement Thursday, Hartmann said, "The final orders granted today are another positive milestone in our financial restructuring. We look forward to emerging from this process positioned for long-term success with a rightsized balance sheet, greater casino floor appeal, and the ability to continue providing our guests with a personalized Revel experience."

Contact Suzette Parmley at 215-854-2855, sparmley@phillynews.com, or on Twitter @SuzParmley.

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