A federal judge gave Revel permission Friday to abort a planned sale of the property to Brookfield US Holdings, setting a Jan. 5 hearing to consider approving a sale to developer Glenn Straub’s company.
Revel said Brookfield’s $110 million offer won a September bankruptcy auction for the Boardwalk property, but last month Brookfield said it expected to abandon the deal, claiming it could not satisfactorily rework bond debt connected to Revel’s power plant. That put Straub’s Polo North Country Club Inc., whose $95.4 million offer was named runner-up in the auction, in place to buy the defunct resort.
Straub and his representatives were not at Friday’s hearing in Camden. Nor were Brookfield’s.
Revel attorney John Cunningham said Friday that Brookfield “repudiated” the planned sale and failed to consummate the deal by a deadline in late November.
“We believe we absolutely have the right to terminate this agreement,” he said. “We’re going to keep their deposit. It’s $11 million.”
A Brookfield spokeswoman said last month that the company was balking at the deal because of an unduly burdensome financing arrangement connected to construction of Revel’s power plant.
ACR Energy Partners, effectively Revel’s sole power supplier, helped build the plant with $118.6 million in municipal bonds and a roughly $40 million equity investment.
Revel’s 20-year energy contract with ACR required Revel to repay the bond debt with about 11.6 percent interest on average and the equity investment at 15 percent to 18 percent.
The deal, which saddled Revel with more than $1.5 million in monthly power-plant financing fees before it paid a penny for actual energy used, has dogged Revel in and out of bankruptcy court.
Straub intends to drop the contract, Cunningham said Friday. But it’s unclear that there’s another energy supplier on hand to power Revel.
Though closed, Revel has to keep the power running at its Boardwalk complex to prevent fungus from growing in the building.
Cunningham said investors who control the municipal bonds are playing “a game of chicken” with Revel’s ability to reopen as a going concern. Revel is being held hostage through “hold-up antics by a bunch of out-of-money bondholders,” he said.
Revel is hemorrhaging money, said Thomas Kreller, attorney for Wells Fargo, which is bankrolling Revel’s Chapter 11 case.
Kreller, who wanted the Straub sale hearing fast-tracked, said “It’s unfortunate that we find ourselves in a situation where the patient continues to bleed.”
He called Revel’s energy contract “a dark cloud looming over the entire process.”
“We can’t lose track of what the market has actually said about this contract,” he told the judge, adding that two potential buyers — Brookfield and Straub — have determined they “are not going to touch this contract with a 10-foot pole.”
Chief U.S. Bankruptcy Judge Gloria Burns on Friday suggested the parties take the energy dispute to mediation given the import of forging a resolution.
“It’s huge,” she said.
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