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Atlantic City, N.J. - From the day it opened less than a year ago, Revel decided to break the rules.
The newest casino in Atlantic City banned smoking, didn't offer a buffet, turned its back on bus-riding day trippers and focused on the upscale leisure traveler more than the slot-playing senior citizen.
But Monday, the $2.4 billion resort found it could not break the law of supply and demand as it filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Camden.
Dragged down by a combination of bad timing (It started construction just before the U.S. economy cratered and was too far along to scrap when things were at their worst.) and business decisions that flew in the face of what had previously worked when things were going well for Atlantic City, the casino-hotel that was viewed as the resort's best hope finds itself in the same place that many of the city's other casinos have been or have barely escaped.
In filings with securities regulators last week, Revel said it was worth no more than $450 million, and it could take four years to become fully profitable.
A majority of Revel's lenders has already signed off on the so-called pre-packaged bankruptcy, which the company hopes to speed through bankruptcy court, emerging by early summer. It plans to continue normal operations, paying employees and vendors, and predicts guests will not notice anything different.
"Backed by overwhelming lender support, we remain on track to complete our financial restructuring ahead of the critical summer season," said Jeffrey Hartmann, Revel's interim CEO. 'We will emerge from this recapitalization positioned for long-term success, with the financial capacity to pursue our amenity enhancement opportunities, and the ability to continue providing our guests with a signature Revel experience."
The deal will wipe out 82 percent of Revel's $1.5 billion in debt by converting it into equity for lenders. That will leave the company, Revel AC, with a much more manageable $272 million in debt.
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.