Revel, Atlantic City's $2.4 billion megaresort, has hired outside legal and financial advisers to possibly help it restructure its enormous debt, New Jersey’s top casino regulator said Wednesday.
David Rebuck, director of the state Division of Gaming Enforcement, said it is not yet clear whether Revel is considering a Chapter 11 bankruptcy filing as an option.
“What I do know is they are looking for outside assistance beyond their management structure,” Rebuck told reporters after a New Jersey Casino Control Commission meeting.
Rebuck noted that Revel has been keeping his office informed of talks with its lenders and advisers. He expressed confidence Revel will be able to solve its financial difficulties.
“As long as they’re talking, and as long as they are working together, I’m optimistic that they’ll be fine operationally,” Rebuck said.
Rebuck added that his agency will continue to closely monitor Revel’s finances, as it does with all 12 Atlantic City casino hotels. As a casino licensee, Revel must meet New Jersey’s financial stability requirements.
“We’re at the table, ensuring the negotiations between the two parties remain in place,” Rebuck said of the state’s involvement.
Revel, Atlantic City’s newest casino, owes about $1.3 billion to its creditors and has struggled to keep pace with its financial obligations. On Monday, Revel said in a filing with the federal Securities and Exchange Commission that it is amending its credit agreement for the fourth time as part of its negotiations with lenders.
Revel declined to comment on the negotiations other than issuing a brief statement by its chief investment officer, Michael Garrity.
“Revel has consistently worked to increase our financial flexibility, as evidenced by the additional capital we raised in December,” Garrity said. “We will continue to prudently evaluate various alternatives with regard to our capital structure.”
The casino has been able to stay afloat through negotiations with lenders, including $150 million in additional financing secured in December. But earlier this month, Moody’s Investors Service cut Revel’s credit rating and estimated a higher probability of default.
“The company’s significant leverage coupled with an unfavorable earnings outlook suggest that Revel’s capital structure is not sustainable in its current form,” Moody’s said.
Revel, in its securities filing, disclosed that Alvarez & Marsal North America LLC has been retained as a financial adviser. Alvarez & Marsal, a global services company, says on its website that its specialties include helping “distressed borrowers and lenders.”
Revel’s hiring of a team of financial and legal experts follows another disappointing month for the casino’s gambling revenue. In January, Revel took in just under $8 million from its slot machines and table games, placing it next to last in gambling revenue among the city’s casinos. Month after month, Revel has been mired near the bottom of the pack in gambling revenue.
The most recent quarterly profits report for the casino industry underscores Revel’s financial plight. Revel suffered a $36.8 million gross operating loss in the third quarter of 2012. The fourth-quarter report will be released by the Division of Gaming Enforcement in April.
Figures show that Revel had net revenue of $61.9 million in the third quarter, but its bills outstripped its income. In the same quarter, Revel paid $37.3 million for interest expenses and nearly $80 million to its vendors for goods and services. Altogether, Revel had an $86.8 million loss in net income for the quarter.
Revel’s third-quarter interest expenses were particularly glaring when compared with other casinos. Borgata Hotel Casino & Spa, annually Atlantic City’s most profitable property, had the second-highest amount of interest expenses in the third quarter, at nearly $20.8 million, figures show.
Staff Writer Hoa Nguyen contributed to this report.
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