Revel formally files for Chapter 11 bankruptcy

AC Revel Inc., owner of the struggling Revel casino in Atlantic City, formally filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Camden Monday, as expected. The company filed at 10:20 p.m.

The prepackaged bankruptcy, with terms Revel's creditors have agreed to, is meant to reduce the casino's estimated $1.5 billion in debt by about $1 billion and provide it $250 million in debtor-in-possession financing, $42 million of which is new money. The additional financing will provide Revel new working capital, fund certain capital expenditures and pay other expenses related to the financial restructuring.

The company said in a statement after the filing that Revel has secured votes from a supermajority of its lenders, which is in excess of the amount required for the court to approve the plan.

Revel's new interim CEO, Jeffrey Hartmann, a former chief executive at Mohegan Sun Casino Resort in Connecticut, received regulatory approvals last Tuesday to start the job. He replaces Kevin DeSanctis, who stepped down.

"Backed by overwhelming lender support, we remain on track to complete our financial restructuring ahead of the critical summer season," Hartmann said in a statement Monday night. "We will emerge from this recapitalization positioned for long-term success, with the financial capacity to pursue our amenity enhancement opportunities, and the ability to continue providing our guests with a signature Revel experience."

The luxurious Revel, which many had hoped would reverse Atlantic City's flagging fortunes when it opened April 2 on the northern end of the Boardwalk, has failed to grow the resort's gaming market. Its gross casino revenue from slots and table games has placed it near the bottom among the Shore's 12 gambling halls every month since it debuted.

The 6.2 million square foot casino resort has since announced it was adding more reasonably priced restaurants and a VIP slot lounge. Those familiar with its reorganization plan, to be heard before U.S. Bankruptcy Judge Judith Wizmur, say Revel will also be adding a smoking area and a beach bar by Memorial Day weekend. Revel had been Atlantic City's first and only fully non-smoking casino.

But the planned policy reversal does not come as a surprise. Critics and customers alike contend that most gamblers also smoke, and that the move would help make Revel competitive with the other 11 casinos, which allow smoking on 25 percent of their gaming floors.

"It's a good thing," gaming analyst Andrew Zarnett, of Deutsche Bank AG, said of the bankruptcy filing. "The company clearly couldn't handle the debt structure that it had, and this filing significantly reduces the outstanding debt burden.

"The new management challenge is going to be to reconnect with customers through improved design, improved service and improved amenities," Zarnett said. "The old Revel didn't do a very good job catering to casino customers, and the opportunity is there for the new team to connect with one of the primary drivers of Atlantic City - which is the casino customer."

Throughout the restructuring, Revel's owner said the casino intends to continue normal business operations and that employees and vendors will be paid accordingly.

The company expects to complete its restructuring, which is subject to bankruptcy court approval and the conditions set forth in the restructuring agreement, within 45 to 60 days. It said it anticipates emerging from Chapter 11 by early summer - the start of the peak Shore season.