One day after announcing plans to restructure more than $1 billion in debt through a bankruptcy filing, Revel had its corporate credit rating downgraded to the lowest possible score while at the same time drawing words of support from the governor.
Gov. Chris Christie, in a press conference in Bergen County, sought to allay fears that Revel’s planned bankruptcy would send a negative message to casinos across the city and potential new developers. Christie said the plans show that Revel’s creditors still have faith in the resort.
“They could close Revel down if they wanted to,” Christie said, according to transcripts provided by his office. “If they thought that there was no future there, they could close Revel down. Instead, they're taking debt that they're owed legally and turning it into ownership. That's an investment by these folks in that hotel.”
A majority of its creditors have agreed to reduce Revel’s debt load by more than $1 billion in exchange for greater equity in the casino, according to the casino, which made the announcement Tuesday. Lenders also will put forward $250 million in debtor-in-possession financing with about $45 million in new money commitments, according to the company.
“And the other thing that people should be assured of is that not a nickel of taxpayer money has gone into Revel,” Christie said.
The $2.4 billion casino was one of the first recipients of an Economic Redevelopment and Growth tax incentive award of $261 million, which allowed Revel to receive a rebate of tax revenues over 20 years.
“We still stand ready to support Revel when Revel becomes profitable, and to give them tax incentives when they become profitable,” Christie said. “But until that time, it's their private investors who are taking the risk.”
While creditors would take control, no discussions have occurred regarding management changes, including the status of Kevin DeSanctis, Revel’s chief executive officer.
DeSanctis said in a statement Wednesday that the resort is still planning to execute on its business plan.
“By right-sizing the balance sheet, we will be able to execute on our business plan and achieve the results we know we are capable of,” DeSanctis said. “Revel guests can expect to enjoy distinctive gaming options, as well as more competitive offers for Revel's three-tiered cardholder program.”
The casino’s reward program will continue to be based on how much guests spend on gambling, dining, hotel, restaurant and nightlife expenses, he said. Revel also is expected to continue with its concert line-up, including Rihanna and Alicia Keys, and plans to open HQ Dayclub, a dedicated beach club facing the ocean, DeSanctis said.
Standard & Poor’s downgraded Revel’s corporate credit rating on Wednesday shortly after Revel filed official notice of its bankruptcy intention with the Securities and Exchange Commission and signaled it was skipping an interest payment that had been due Tuesday based on an agreement reached with a majority of creditors.
“A payment default has not occurred relative to the legal provisions of the term loan, because there is a three-day grace period in which to make the interest payment,” S&P said in a statement. “However, we consider a default to have occurred.”
Revel said in its notice with the SEC that it was not intending to make the payment.
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