follow us:Google+ FacebookLinkedInTwitterRSS Feeds

advertisement

Analyst expects Revel to get credit capacity increased to $100M

By

Back to Top Comments Email Print

Latest News

advertisement

Though Revel Entertainment faced a $35 million net operating revenue loss and disappointing gaming revenue throughout less than five months of operation, an analyst said the casino will have no problem securing an increase in credit capacity it's seeking from lenders.

"If Revel was owned by a company with five other casinos, you wouldn't even be hearing about the need for a revolver. The issue is it's owned by a single-property company, and it needs the extra money because it's not being supported by other casinos," said John Kempf, managing director of RBC Capital Markets' gaming research sector. "The signal here is, despite their numbers being weak, lenders have come in and decided to support them. In some ways, it's a positive."

The resort currently has solid commitments for $30 million from its $50 million credit facility, and announced Monday afternoon it wants its lenders to expand that credit capacity to $100 million.

Kempf said "what we've been hearing is the indications of interest for those are fine right now," and like Revel CEO Kevin DeSanctis, he expects lenders to make the additional $70 million commitments.

"Obviously, the casino opened up below expectations … but there are many people who still believe having a brand new, very nice casino is a good thing for Atlantic City," Kempf said. "I think everyone knows the gaming market is very difficult right now, and there's a lot of competition in the region. Revel will need to have more quality products to compete with those other markets, and it will need more credit to do that."

Jeff Vasser, president of the Atlantic City Convention and Visitors Authority, said another reason why the casino wants to extend its line of credit in late August is it's "anticipating slower months ahead."

"Right now is the time everybody's planning for their cash flow needs. In the summer, they fill their coffers to hold out for the winter months, and that's just the way the business cycle works — though I can't say for sure if anyone else is extending their credit right now," Vasser said. "Operationally, I don't see this having any impact on Revel at all. But come next fall, after a year of ramping up its reserves and having the meeting business kick in with the offseason, I think we can assume we'd see a second summer stronger than its first, and a payoff from that cash flow."

Share This Story On:

Write to the Editorial Department at editorial@njbiz.com

advertisement

Comments


Be the first to comment.



Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
     View Comment Policy

Advanced search
Sponsored by
advertisement
  
  
advertisement
  
  
advertisement
Back to Top