Revel emerged from bankruptcy protection Tuesday, culminating a dramatic financial overhaul that frees Atlantic City’s newest casino of much of its suffocating debt and places it under new ownership.
Revel had filed for bankruptcy March 25 in a “prepackaged” deal with lenders that ensured a quick turnaround under court supervision. A U.S. Bankruptcy Court judge and the New Jersey Casino Control Commission gave their approval to Revel’s restructuring plan last week, allowing it to formally exit from Chapter 11 on Tuesday.
“This is truly a monumental day for Revel,” said Dennis Stogsdill, the casino’s chief restructuring officer. “Thanks to the support of our lenders and the dedication of our fantastic employees, we have completed a transformational financial restructuring not only successfully, but in time for the important summer season.”
Lenders will now get an 82 percent stake in Revel’s ownership in a debt-for-equity exchange. Revel’s debt has been shaved from about $1.5 billion to $272 million, removing much of the huge financial burden that threatened the casino’s survival.
“With a right-sized balance sheet, reduced debt load and improved cash flow, we have emerged from this process stronger and better positioned for success,” Stogsdill said.
Since opening in April 2012, the $2.4 billion megaresort has languished near the bottom of the pack in gambling revenue among Atlantic City’s 12 casinos. Revel suffered a $111.1 million gross operating loss in its first year of operation, documents show.
Stogsdill told the Casino Control Commission last week that the property hopes to begin turning a profit in the summer of 2014. In the meantime, Revel will be helped by $75 million in fresh financing now that it has emerged from bankruptcy. Stogsdill said Revel will immediately tap $6 million to $10 million of that financing to help pay expenses.
As part of its planned turnaround, Revel predicts that its net revenue will increase from $152 million last year to $256.4 million in 2013. The forecast calls for $322.8 million in net revenue in 2014 and $378.9 million in 2015. Revel is also predicting that it will narrow its operating loss from $111.1 million in 2012 to $42.7 million this year.
Jeffrey Hartmann, interim chief executive officer, leads the new management team that has taken charge of Revel under its new ownership. Revel has also hired an outside consulting firm to oversee its marketing efforts.
In testimony last week before the Casino Control Commission, Hartmann said Revel will change its marketing strategy to focus on becoming a “casino-centric” property instead of continuing to promote itself as an exclusive resort marked by high-priced restaurants and hotel rooms.
Revel will adjust its pricing to become more affordable for the typical Atlantic City gamblers. It will also scrap its no-smoking policy, a move that is aimed at drawing more hardcore gamblers through the door.
Revel hopes to catch up to the stronger casinos in town by combining its new marketing strategy with an array of new amenities on the casino floor and in other parts of the resort. This month, it opened a $3 million high-limit slots lounge and a VIP club. A new beach club will debut for Memorial Day weekend, another sign of Revel’s post-bankruptcy plan.
“We view this as a significant milestone for Revel and now turn our undivided attention towards growing our casino revenue base and are singularly focused on attracting guests to the property,” Hartmann said of Revel’s exit from bankruptcy.
Revel also plans to diversify its entertainment lineup to appeal to a broader customer base. It will bring in country acts and comedians, in addition to the pop, hip-hop and rock artists who have headlined at the casino’s 5,000-seat concert arena.
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