Morgan Stanley to end ownership in Revel Casino

Wall Street investment bank Morgan Stanley plans to dispose of its majority ownership in the $2 billion Revel Casino in Atlantic City.

The move, announced in the firm's 8-K filing with the Securities and Exchange Commission Thursday, sets the stage for another potential investor to come in and provide the final $1 billion in financing that the stalled Boardwalk project needs for completion.

A leading candidate is Export-Import Bank of China, also known as China Eximbank, with which Revel's chief executive officer, Kevin DeSanctis, has been in negotiations for months. DeSanctis told The Inquirer last month that he was meeting with Chinese banks to secure financing.

"Revel remains in full discussion with potential lenders on securing the remaining financing to complete the construction phase, and we will provide updates on the development," Revel spokesman Richard Land said Thursday. "Once final financing is secured, it will take approximately 20 months to complete and open the facility."

Revel Entertainment Group L.L.C., the Morgan Stanley subsidiary that has been developing the casino, is seeking $300 million in state tax breaks, which has put it squarely at odds with local labor unions and fiscal conservatives who oppose giving a state grant to a project backed by a giant Wall Street firm.

With Morgan Stanley out as majority owner, it remains to be seen where Revel stands with the tax breaks. The New Jersey Economic Development Authority is set to take up the issue this month.

In addition, Revel is seeking $50 million in tax abatements from Atlantic City.

Results of a Fairleigh Dickinson University poll of 802 registered New Jersey voters earlier this week showed most were not in favor of giving the $350 million in tax breaks to Revel. The poll, conducted by phone March 23 to 28, found that three out of five state voters, or 60 percent, opposed the tax breaks, with two of those three, 39 percent, strongly opposed.

Thursday's 8-K filing stated that Morgan Stanley's board of directors authorized management to proceed with a plan of disposal for Revel Entertainment Group.

The company will consider various alternatives to fully dispose of Revel, including a direct sale to a third party or an auction, the filing said. The disposition will be included as discontinued operations in Morgan Stanley's condensed consolidated statement of income for the first quarter of 2010.

Morgan Stanley's total investment in Revel as of Feb. 28 was about $1.2 billion, and it had a 94.5 percent ownership. "It is anticipated that the disposition of Revel will result in a substantial loss of that investment," the filing stated.

China State Construction Engineering Corp., a building company owned by the Chinese government, has a 51 percent stake in the construction-management team overseeing Revel's completion.