Revel filed for bankruptcy Monday, according to online court documents, formalizing the start of a restructuring process that will allow the $2.4 billion megaresort to continue operating with less debt and give creditors an equity stake.
“Backed by overwhelming lender support, we remain on track to complete our financial restructuring ahead of the critical summer season,” Revel interim Chief Executive Officer Jeffrey Hartmann said in a statement. “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.”
Lawyers representing the resort are expected to appear before a U.S. Bankruptcy Court judge in Camden in the next day or two for a hearing on the matter.
In seeking bankruptcy protection, Revel is seeking to reduce its debt from $1.5 billion to $272 million through a restructuring that will give creditors who hold many of the loans an equity stake in the business.
Some lenders also have agreed to give Revel additional money for use while the resort is under Chapter 11 protection. Lenders will provide $42 million in new commitments in addition to $208 million in existing loans that will be part of Revel’s debtor-in-possession financing, the company said in a statement.
As part of exit financing, Revel will obtain a $75 million revolving credit loan and $260 million term loan, which will be used for working capital, pay for capital projects, and repay financing and expenses related to the restructuring.
Based on disclosure forms sent to creditors, Revel is estimated to be worth between $400 million and $500 million, and that is assuming the resort can become fully profitable in four years.
Putting aside interest, taxes, debt service and other non-operating expenses, Revel lost $111 million last year and projects it will lose $43 million by the end of this year, according to disclosure forms submitted last week with the federal Securities and Exchange Commission.
The company estimates 2014 may be the first year the casino will bring in more revenue than what it takes to operate Revel, projecting $9 million in earnings before interest, taxes, depreciation and amortization.
About 4,400 people work at Revel, with about three-quarters of them directly employed by the megaresort and the other quarter employed by retail, food and beverage contractors. The resort opened last April, but due to lackluster results has consistently placed in the bottom third of the market in gambling revenue.
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