Atlantic City’s Revel Casino Hotel, the US$2.4 billion resort that was supposed to revive the seaside destination’s sagging fortunes, has warned its staff that it will shut down this summer if a buyer can’t be found in a bankruptcy auction.
Layoffs could begin as soon as 18th August, management said, according to The Associated Press, which has seen the announcement.
Shortly after distributing it, Revel filed a Chapter 11 petition in US Bankruptcy Court, its second trip into reorganization in as many years.
A judge in Camden, NJ, was slated to hear initial motions on the petition today, including requests to continue normal operations and pay employees and bills while under Chapter 11 protection. Revel President and COO Scott Kreeger said the casino has obtained a $125 million loan from one of its existing financiers so it can continue to operate.
It could not be determined how much Revel might sell for, but it is sure to be a steep discount. Wall Street analysts and some casino executives said last month that $300 million was too high a price.
A labor union that has been at odds with Revel since before it opened pegged its value in April at $25 million to $73 million, based on public filings. “A sale of Revel to a buyer who wants to keep the property open and retain the employees is the best thing for the workers, for Atlantic City and for Revel, and Local 54 is committed to working with all parties to save the jobs,” said Bob McDevitt, president of the local branch of Unite-HERE.
For much of the past year, Revel has sought a buyer for the property, which has languished near the bottom Atlantic City’s 11 casinos in gaming revenue. But it also kept the option of a second bankruptcy filing as potential buyers expressed interest but failed to pursue a deal.
The casino is owned by investors who gained control of it during bankruptcy last year, swapping debt for equity in the property. The transaction wiped out 82% of Revel’s $1.5 billion in debt. But even with that breathing room, Revel continued to struggle against the backdrop of increasing competition from casinos in neighboring Pennsylvania, New York and Maryland. Atlantic City’s casino revenue fell from a high of $5.2 billion in 2006 to $2.86 billion last year.
Revel has never been profitable since it opened in 2012. It posted a gross operating loss of $21.7 million in the first quarter of this year. For all of 2013, it lost $130 million, up from the $110 million it lost during the nine months it was open in 2012.
