Revel Atlantic City - Finances

Finances

Construction of the resort cost $2.4 billion. Global Financial company Morgan Stanley, the owner of 90% of Revel Entertainment Group, decided in April 2010 to discontinue construction and put its stake in Revel up for sale and walk away from its $932 million investment. On February 1, 2011, as part of his plan to revitalize Atlantic City, Governor Chris Christie announced that the State of New Jersey would invest 260 million dollars in the stalled project in exchange for 20% of the revenues. On February 17, 2011, Revel Entertainment Group, LLC announced that it completed a $1.15 billion financing package which enables the company to complete construction of Revel.

Revel lost $35 million in the 2nd quarter of 2012, and lost $37 million in the 3rd quarter of 2012. In August 2012, Moody's Investor Services and Standard and Poor's downgraded Revel's credit to Caa2 and CCC, respectively. On August 20, 2012, Revel asked lenders for a $100 million credit cushion. In November 2012, casino officials warned federal regulators about growing debt load of more than $1.3 billion could lead to bankruptcy or foreclosure if revenues did not increase in the foreseeable future. Atlantic City officials noted that Revel owed $12 million in unpaid property taxes, and Unite Here Local 54 said that Revel owed $51 million to contractors.

Stephen Sweeney, the president of the New Jersey Senate, stated that Revel's finances are "dire", and he requested a detailed financial report on Revel from the state Division of Gaming Enforcement. On December 27, 2012, Revel announced that they had received another $150 million in loans, including a $125 million term loan and a $25 million increase to an existing $100 million revolving loan. The casino stated that they had paid their back property taxes to Atlantic City, would be installing more slot machines, and would add lower-priced and fast food restaurants.

In early 2013, because of uncertainty about whether Revel would have enough revenue to pay back its loans, Moody's and Standard and Poor's downgraded Revel's credit rating again to Caa3 and CC, respectively. On February 19, 2013, Revel announced that it was filing for Chapter 11 bankruptcy. The prepackaged bankuptcy will include immediate payment of all priority claims (e.g., vendors, taxes), and the reduction of Revel's debt from $1.503 billion to $272 million in exchange for the transfer of all of Revel's equity to the creditors. As part of their bankruptcy filing, Revel announced that the casino's value had dropped from $2.4 billion to $450 million, and predicted that Revel would not be profitable until 2017. In an attempt to attract more business, Revel has created a smoking area and reduced hotel room prices, and plans to create an inexpensive food court, and a private lounge for high rollers.