The closing of Atlantic City's Revel casino has caused a rush of people signing up for unemployment benefits, with around 500 people lining up at a temporary resource center yesterday, Reuters reported. Around 8,300 people are losing jobs with three casinos closing in less than a month — Showboat, a Caesars Entertainment Corp. property, closed Sunday morning, Revel closed early on Tuesday morning and Trump Plaza Hotel and Casino is due to close on Sept. 16. Atlantic County, which includes Atlantic City, saw the biggest nonfarm employment drop of all U.S. metropolitan areas in July compared with the same time last year, preliminary U.S. Labor Department data showed last week.
The Trump Taj Mahal, the 24-year-old Atlantic City, N.J., boardwalk casino, has recently broken some of its loan covenants and without a quick deal with its creditors could be headed for a chapter 11 reorganization within days, the New York Post reported today. So far, talks between Trump Entertainment Resorts — which owns the Taj and its neighbor, the soon-to-close Trump Plaza — and its creditors have not found an out-of-court solution, sources said. There was hope around the negotiation table that Carl Icahn, who owns much of the Trump Entertainment debt, would agree to convert that debt into equity and keep the 2,248-room hotel-casino out of Chapter 11. Marc Lasry’s Avenue Capital in 2009 led a group of hedge funds that bought Trump Entertainment out of bankruptcy, beating a competing offer from Icahn. Donald Trump retained a less than 10 percent stake.
Troubled Caesars Entertainment, America’s largest casino chain, is in talks with its senior creditors to restructure it massive debt load, the New York Post reported yesterday. The talks are likely aimed at reaching a deal that would give the senior debt-holders positions in the two newly created pieces of Caesars that hold the most promising assets, including its online gaming business. Caesars owes its junior creditors, including David Tepper’s Appaloosa Management, $400 million as of December. While it can make the payment, Caesars might want to finish the debt restructuring beforehand so that it does not give that $400 million to those particular creditors but rather to senior creditors who support the restructuring. At the same time, the company is trying to move control of its profitable rewards program out of the brick-and-mortar side of the business. Caesars operates more than 50 casinos under the Bally’s, Caesars, Harrah’s and Horseshoe brands.
Among the thorny issues surrounding the shutdown of Revel at the end of Labor Day weekend is the fate of its $129 million utility plant, The Philadelphia Inquirer reported today. It's not unusual in bankruptcy for the prosaic matter of utility bills to capture a lot of attention because electricity and other utilities are essential to keeping a bankrupt business going. In Revel’s case, there's a twist. To build the utility plant, which chills water for Revel’s air-conditioning, provides hot water and distributes electricity to the 47-story tower, the plant's owner, ACR Energy LLC, borrowed $118.6 million in the tax-exempt municipal-bond market in 2011. The $118.6 million in bond debt came unscathed through Revel's first bankruptcy last year, which wiped out $1.23 billion in Wall Street debt. When Atlantic City, N.J.-based Revel filed for its second bankruptcy in June, the casino had $447 million in secured debt. Conflict over what happens to the municipal-bond debt is likely to be a stumbling block in negotiations with prospective buyers. The bond debt is additional Revel debt under a 20-year contract because the casino is ACR's only customer. The utility plant is also an example — along with 13 restaurants and several entertainment firms that will likely lose significant investments when Revel closes — of potential collateral damage from the casino's colossal failure.
As hopes for a last-minute buyer dim, Atlantic City's Revel casino has laid out its closure plans, from disposing of opened bottles of alcohol to cashing unredeemed poker chips, Reuters reported yesterday. The plans detailed in court documents mark the end of a $2.4 billion hotel-casino that was hailed by New Jersey state leaders as a model for reviving the New Jersey seaside city when it opened in 2012. The plan will go into effect on Sunday, as the sleek casino's 14 restaurants and five pool areas close, allowing for the removal of perishable goods. The 47-story hotel, restaurant and casino complex never caught on with gamblers. It opened just as neighboring Pennsylvania and Delaware embraced casinos, and filed for bankruptcy for the first time in 2013. The case is In re Revel AC Inc., U.S. Bankruptcy Court, District of New Jersey, No. 14-22654.
Revel AC Inc., the struggling Atlantic City, N.J.-based casino operator, is still pursuing potential sale offers as it plans to shut down operations by Sept. 2 to stanch its cash loss of about $2 million a week, Bloomberg News reported yesterday. “It is still our goal and hope that we will have a successful sale,” John K. Cunningham, a Revel lawyer, said today at a hearing in U.S. Bankruptcy Court in Camden, New Jersey. He said that the casino’s losses were reflected in offers, and Revel would have to be shut down to entice acceptable bids. Revel is “bleeding money every week,” Cunningham told U.S. Bankruptcy Judge Gloria M. Burns. “The current bids we have don’t value Revel as an ongoing operation,” and the offers show bidders look at Revel’s losses like they would be “stepping into a black hole,” he added. Revel, which employs about 3,140 people, told workers in June, when it filed its second bankruptcy in two years, that it may be forced to close for good if it fails to attract a buyer.
Revel AC Inc., the bankrupt Atlantic City, New Jersey, casino operator, postponed an asset auction indefinitely, the day after announcing it will close its doors by next month, Bloomberg News reported yesterday. The casino company said in court filings yesterday that it’s still reviewing bids and working on a “value-maximizing” sale. The company said yesterday that the resort will be shuttered no later than Sept. 10 because none of the offers met certain requirements. Revel delayed the auction, set to take place today after already being pushed back one week, to a date to be determined so it can work with potential buyers toward “the goal of naming a successful bidder,” according to court documents. Revel’s casino revenue plunged about 36 percent in July compared with the previous year, according to a report issued today by the New Jersey Division of Gaming Enforcement. Casino revenue in the New Jersey gambling mecca fell more than 40 percent to about $2.8 billion in 2013 from a peak of more than $5 billion in 2006.
Atlantic City's Revel Casino Hotel said that it will shut down next month after failing to find a buyer in bankruptcy court, the Associated Press reported yesterday. The company said that it will close its doors on Sept. 10. The move comes two years after the $2.4 billion casino opened, and the company never turned a profit. The casino was due to be sold at a bankruptcy court auction last week, but that was postponed until Thursday to allow casino officials to study bids that were received. But after Revel's board met on Monday, the decision was made to shutter the iconic glass-covered casino at the north end of the Boardwalk.
In related news, the shuttering next month of Revel, the $2.6 billion hotel and casino that was meant to usher in a new era of opulence in Atlantic City when it opened in 2012, is set to quicken the seaside community’s downward spiral, Bloomberg News reported yesterday. Five years after the longest recession since the 1930s, hotel rooms sit vacant and revenue keeps falling in what was once the second-largest U.S. casino market. New Jersey Governor Chris Christie’s turnaround plan for the municipality, begun in 2011 and hinged on Revel’s success, hasn’t delivered, prompting Moody’s Investors Service to cut the city’s $245 million of general-obligation debt to junk last month. Moody’s pins the city’s struggle mostly on its dependence on one industry. About 70 percent of taxes come from casinos, whose revenue has slid for seven straight years as competition from neighboring states intensifies. While Las Vegas has rebounded, drawing tourists with conventions and restaurants, Atlantic City remains largely a place for gambling day-trippers. Read more.
Revel AC Inc., whose Atlantic City, N.J., casino has been in bankruptcy twice since it opened in 2012, postponed its auction set for today one week to Aug. 14 so it can analyze multiple purchase offers it received, Bloomberg News reported today. Revel “received a number of bids” by the Aug. 4 deadline yet the company still requires “additional time to fully analyze and evaluate the bids,” according to court documents filed yesterday. Revel will probably postpone a hearing to seek approval of the sale to the winning bidder, which is currently set for Aug. 8, to a reserve date of Aug. 18.
Casino giant Caesars and a group of its creditors traded competing lawsuits over the company's plans to rework its more than $20 billion debt load, the Wall Street Journal reported today. A representative for junior bondholders of Caesars Entertainment Operating Co., one of the companies that controls Caesars's more than 50 casinos, filed a lawsuit on Monday accusing Caesars of moving assets between entities to protect its "good" assets from creditors as the rest of the company's financial condition deteriorated. Caesars, meanwhile, filed its own lawsuit yesterday accusing a group of mostly junior bondholders of trying to push Caesars Entertainment Operating into default by interfering in the company's restructuring efforts. The dueling lawsuits are the latest moves in the contentious restructuring of the Caesars Entertainment Corp. group, which has struggled since private-equity firms Apollo Global Management LLC and TPG led a roughly $30 billion leveraged buyout of the company in 2008.
