Revel has completed a $100 million financing package that will give it more breathing room through 2013, although the casino continues to face questions about its ability to pay its bills.
Revel CEO Kevin DeSanctis said the company closed the credit deal Wednesday night, adding an extra $70 million to $30 million in commitments that it had already secured. Revel first announced Monday that it was seeking the financing.
DeSanctis explained the new funding gives Revel a bigger cushion to meet its operating expenses and should erase any concerns about the company’s financial viability.
“That issue has been resolved by us increasing our financial flexibility,” he said in an interview Thursday.
DeSanctis was responding to concerns about Revel’s finances circulating among Wall Street firms and Atlantic City’s largest casino union. On Thursday, Local 54 of UNITE-HERE sent a letter to the New Jersey Division of Gaming Enforcement asking it to investigate whether Revel is financially stable, a key requirement for holding a casino license.
Division spokeswoman Lisa Spengler declined to comment on the Local 54 letter, saying the agency is preparing its own letter in response.
Local 54, which represents about 14,000 employees at Atlantic City’s 11 other casinos, has been battling with DeSanctis over attempts to unionize Revel’s work force. Local 54 has also filed a lawsuit asking the court to block $261 million in state tax breaks approved for Revel, claiming it is a waste of public funds.
Local 54 President Bob McDevitt said Revel is facing more than $27 million in claims stemming from construction liens and lawsuits filed by contractors that built the $2.4 billion megaresort.
DeSanctis, however, said Revel is conducting a routine audit before it closes out its construction bills. He pledged that all contactors and vendors will be paid what they are owed once the audit is completed.
“There isn’t one vendor who hasn’t been paid money they are owed, ultimately. If we owe people, we’ve paid them,” DeSanctis said.
McDevitt said he is worried that Revel could fail altogether, costing thousands of jobs and causing further harm to an already slumping casino industry.
“We have to recognize the crisis,” McDevitt said. “The DGE should bring them into a room and ask Revel, ‘What is your contingency plan? How do you turn it around, because there’s a lot at stake here.”
McDevitt argued that the state must step in before Revel’s finances grow worse. Revel has gotten off to a shaky start since its April 2 opening. It has been mired in eighth place each month for gambling revenue among Atlantic City casinos. Revel posted a nearly $35.2 million loss in the second quarter.
Wall Street financial companies Standard & Poor’s and Moody’s Investors Service have responded by downgrading Revel’s corporate credit rating, believing the company’s debt has become riskier.
“Before we get to the eleventh hour, let’s figure out what we can do. Literally, it could be shuttered overnight if they don’t have enough money on hand. Our concern is for the 4,000 jobs,” McDevitt said of the possibility of Revel closing.
DeSanctis disputed that Revel is suffering any money shortages. He said the new credit deal gives Revel the ability to tap additional funds, if needed, through 2013 and beyond. He also said that up to this point, the financial experts have had “a really difficult time understanding our business model.”
“I would assume that once everybody reads about our closing (on the financing deal), folks would understand that we now have liquidity,” DeSanctis said. “Almost any analyst will understand we’ll be liquid through 2013 and beyond.”
Local 54 maintains that Revel has been inundated by construction liens and lawsuits over unpaid bills. Revel’s contractors and vendors are seeking a total of $27.3 million, according to figures compiled by the union.
The Press of Atlantic City first reported on July 25 that the Division of Gaming Enforcement has been investigating reports that Revel has not been paying millions of dollars in construction bills. Since then, about $5 million in additional construction liens and lawsuits have been filed against Revel, Local 54 said.
DeSanctis estimated that Revel will pay all of its construction bills within the next six to eight weeks. He described Revel’s relationship with its contractors and vendors as “incredibly good.”
“There’s an audit that takes place, and that’s the normal course. When it’s done, it’s done,” DeSanctis said
The biggest construction lien is for $15.3 million. It has been filed by Stone Concrete Inc., a Pleasantville contractor that is also suing Revel.
“We had some discussions before we filed suit, but they didn’t go anywhere,” said Thomas Shovlin , a New Jersey attorney representing Stone Concrete. “We’re standing behind the complaint. That’s where we are.”
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