New Jersey's newest casino will file for Chapter 11 bankruptcy. Revel Casino says its agreed with its lenders on a bankruptcy filing that will wipe out over $1 billion in debt.
The company stated the following in a press release:
- Restructuring will reduce Revel’s debt load by over $1 billion through an exchange of debt for equity
- Revel plans to recapitalize through consensual prepackaged Chapter 11 reorganization
- Lenders will provide the company with additional liquidity to ensure financial stability throughout the reorganization process
- Revel to continue normal business operations and honor obligations in the ordinary course of business
Revel AC Inc., (“the Company,” “Revel”) announced today that it has reached an agreement with a majority of its lenders to significantly reduce its debt through a debt-for-equity conversion. Revel plans to implement the restructuring through voluntary, prepackaged Chapter 11 cases, and intends to complete the restructuring early this summer.
The restructuring is not expected to impact Revel’s guests, employees and vendors. Throughout the restructuring, Revel intends to continue normal business operations. All services, dining, scheduled entertainment, programming and events will move forward without change or interruption, and employees and vendors will be paid in the normal course of business.
“Today’s announcement is a positive step for Revel,” said Kevin DeSanctis, Revel's Chief Executive Officer. “The agreement we have reached with our lenders will ensure that the hundreds of thousands of guests who visit Revel every year will continue to enjoy a signature Revel experience in our world-class facility.”
After undertaking a comprehensive strategic review of restructuring alternatives, the Company determined that a prepackaged Chapter 11 would offer the best opportunity for Revel to strengthen its balance sheet and would provide the Company with the financial flexibility and resources to invest in the growth of the business.
As part of the restructuring, certain of Revel’s lenders will provide approximately $250 million in debtor-in-possession financing (DIP), approximately $45 million of which constitutes new money commitments and approximately $205 million of which constitutes prepetition debt. No tax payer funds will be used to finance the restructuring.
“The reduction of debt service expense this agreement facilitates will greatly improve Revel’s cashflow to better support day-to-day operations,” noted Michael Garrity, Revel’s Chief Investment Officer. “This restructuring positions Revel for long-term success by providing the Company with the operational flexibility to invest in the growth of our business.”
The restructuring agreement is subject to satisfaction of certain customary conditions.
Revel’s legal advisor in connection with the restructuring is Kirkland & Ellis LLP. Alvarez & Marsal serves as its restructuring advisor and Moelis & Company serves as its investment banker for the restructuring.
Revel opened last April with heavy expectations. But the $2.4 billion casino never did as well as initially hoped.