Revel Entertainment announced late Tuesday it will file for bankruptcy in an effort to wipe out roughly two-thirds of the $1.5 billion debt load associated with its signature casino.
Revel, which opened less than a year ago, has struggled to establish itself as a gaming capital in Atlantic City, which has seen its own gambling fortunes turn since establishing highs in 2006.
No taxpayer funds will be used to finance the restructuring, and the bankruptcy process is not expected to affect casino hours, entertainment, events or staffing, according to a news release announcing the plan.
As part of the restructuring, Revel's lenders will provide about $250 million in debtor-in-possession financing. Of that, $45 million is new money commitments and $205 million is pre-petition debt, according to the announcement.
"The reduction of debt service expense this agreement facilitates will greatly improve Revel's cash flow to better support day-to-day operations," said Michael Garrity, Revel's chief investment officer, in a statement.
As the first new casino built in Atlantic City since the Borgata opened in 2003, there were high hopes for Revel as a savior for the ailing resort city. But the project ran out of money and stalled during construction, until state tax subsidies were put in place to help get the project completed. It has needed two infusions of additional financing since its official Memorial Day opening.
Revel billed itself as a destination resort, focusing on amenities in addition to its casino, but it struggled to catch on with visitors, and was typically among the poorest performers in monthly casino revenue.
"Revel's biggest challenge from the get-go was developing a casino of that size and expenditure at a time of financial crisis in the United States," said Brian J. Tyrrell, associate professor of hospitality and tourism management at Richard Stockton College. "They put a greater emphasis on nongaming attractions, and now need to focus on more traditional means of attracting gamblers to the resort, such as comps and givebacks."
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