CAMDEN — Revel can still be Atlantic City’s “gamechanger” but needs less debt and more money to continue operating even over the next few days, lawyers said during a bankruptcy hearing Wednesday.
“We believe Revel is an anchor tenant for the revitalization of Atlantic City,” Revel lawyer Marc Kieselstein told U.S. Bankruptcy Court Judge Judith Wizmur during the first-day hearing into the company’s restructuring case. “The good news is we believe the problems are eminently fixable.”
Finances at the megaresort, which took $2.4 billion to develop, have become so dire it may be forced to liquidate its assets to pay bills unless it receives an immediate infusion of money to cover expenses, Kieselstein said.
“The debtors would exhaust their liquidity in a matter of days,” he said. “They clearly need the money.”
Lawyers sought the approval of Wizmur on a number of matters — most importantly an interim order allowing the megaresort to obtain $250 million debtor-in-possession financing, including $40 million in new loans, to cover expenses as it works to emerge from the bankruptcy case, Kieselstein said.
The only investors willing to extend the megaresort more money were those who already hold $1.5 billion in loans prior to Revel filing for bankruptcy, lawyers said, recounting a string of moves Revel’s financial advisers considered. They unsuccessfully contacted about a dozen institutions to see if they would consider providing financing to hold Revel over while its bankruptcy case was being considered.
“No parties indicated interest. ... None were even willing to sign a confidential letter,” Kieselstein said. “This was an unfortunate but unsurprising result.
Creditors holding $923 million in loans have agreed to swap the debt for an equity stake in Revel and those holding $208 million in claims agreed to a “roll-up” of the loans as part of debtor-in-possession financing.
Both classes of creditors unanimously support Revel’s restructuring plans, which eventually will allow the megaresort to reduce its debt by about 80 percent to a more manageable $272 million.
“We have a capital structure that is far too burdensome,” Kieselstein said. “It’s not a capital structure that can be fixed with tweaking. ... It’s a capital structure that requires demolition.”
Wizmur, in granting the interim order allowing Revel to obtain the financing and other requests the resort’s lawyers presented to her, appeared impressed by the level of support Revel has received from its creditors.
“What is noteworthy is the substantial consent,” she said.
A third class of creditors, who hold second lien notes totaling $388 million, still have until April to vote on the plan, but those holding about three-quarters of the debt also belong to the other two class of creditors and already have consented, lawyers said.
Revel has struggled since it opened last April, posting two consecutive quarters of gross operating losses and consistently placing in the bottom third of Atlantic City casinos in gambling revenue.
“If you see the Revel property and you see some of the other properties, you know that should not be the case,” Kieselstein said.
Officials have confidence Revel will be able to reverse its losses but only if it acts quickly to fix its balance sheet and reverse some of its operational shortcomings, Kieselstein said, citing an overhaul to Revel’s advertising approach, addition of improved signs and more dining options.
“The peak summer season will soon be upon us,” Kieselstein said.
Listed in bankruptcy documents are other planned changes, such as reversing Revel’s no-smoking policy and adding a designated smoking section, and developing amenities, such as a semi-private players’ lounge, more flexible dining options and completion of a beach club
As the third largest employer in Atlantic City, according to Revel, directly employing 3,323 workers in addition to more than 1,000 others who work for the casino’s retail, food and beverage contractors, the megaresort occupies a key role in the market, officials said.
“Revel and Atlantic City’s future are bound together,” Kieselstein said.
Based on disclosure forms, 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.
Contact Hoa Nguyen: