Revel AC Inc., the casino owner that New Jersey Governor Chris Christie bet on to revive Atlantic City, plans to file for a prepackaged bankruptcy that will reduce its debt burden by more than $1 billion.
Certain Revel lenders will provide about $250 million in debtor-in-possession financing, including $45 million of new loans, the company said yesterday in a statement. No taxpayer money will be used to finance the restructuring, Revel said.
Revel, Atlantic City’s first new casino since 2003, opened in April at a cost of $2.6 billion with the help of Christie, who helped restart the project after Morgan Stanley abandoned construction. An attempt to bring higher-end customers to the seaside city, Revel has struggled to attract business, suffering an added setback when Hurricane Sandy forced its closure for five days starting Oct. 28. New Jersey, faced with regional competition, saw its total gambling revenue fall 8 percent to $3 billion in 2012, the sixth year of declines.
Revel had the second-lowest gambling revenue among the market’s 12 resorts in January, according to New Jersey Division of Gaming Enforcement data compiled by Bloomberg Industries analysts.
The company’s $900 million term loan due in 2017 traded at 38 cents on the dollar yesterday, according to prices compiled by Bloomberg. The debt was arranged by JPMorgan Chase & Co. in February 2011.
With encouragement from Christie, the state’s Economic Development Authority granted $261 million in tax incentives to help jump start stalled construction of the project in February 2011. Christie, a Republican, signed legislation at the Revel construction site that created a state tourism district in the city, boosted marketing of the resorts and eased regulations on casino operators.
“My vision for Atlantic City is that Atlantic City needs to become Las Vegas East,” the governor said in a January 2011 interview with Bloomberg News.
Christie stepped in after Morgan Stanley walked away from the beachfront project in 2010, halting funding on what was conceived as the city’s biggest resort and writing off most of its $1.2 billion investment.
“We are committed to the resurgence of Atlantic City, the tourism district, and the many efforts currently underway to bring world-class attractions and entertainment to the city,” Michael Drewniak, a spokesman for Christie, said in an e-mailed statement.