Atlantic City's Revel Casino Hotel warned its staff Thursday
that it will shut down this summer if a buyer can't be found in bankruptcy
court.
In warning letters given to employees and obtained by The
Associated Press, Revel said it is seeking a buyer for the struggling $2.4
billion casino, but can't guarantee one will be found. If not, employees could
be terminated as soon as Aug. 18, Revel said in the letter.
"If Revel is unable to complete such a sale promptly,
Revel expects to close its entire facility," the letters read. The company
also said it plans to stay open while it searches for a buyer.
Shortly after distributing the letters, Revel filed a
Chapter 11 petition in federal bankruptcy court, its second in as many years.
Revel said it hopes to find a buyer quickly.
"We will work to reach an agreement with a new owner
who will help ensure Revel's long-term financial stability and who shares our
commitment to providing Revel's guests and players an exceptional
experience," said Scott Kreeger, Revel's president and chief operating
officer.
He said the casino has obtained a $125 million loan from one
of its existing financiers so it can operate during its stay in bankruptcy
court.
A judge in Camden will hear Revel's so-called first-day
motions Friday, including requests to continue normal operations, pay employees
and bills while under Chapter 11 protection.
Revel said the Aug. 18 date mentioned in the letter is not a
deadline for a potential closure; rather it fulfills a legal requirement to
give workers at least 60 days' notice of a potential layoff.
It could not be determined how much Revel might sell for in
a bankruptcy auction, but it is sure to be a steep discount. Wall Street
analysts and some casino executives said last month that $300 million was too high
a price. A union that has been at odds with Revel since before it opened pegged
its value in April at $25 million to $73 million, based on public filings.
Bob McDevitt, president of Local 54 of the Unite-HERE union,
which won a representation election at Revel two weeks ago, pledged cooperation
in the fight to save its workers' jobs.
"A sale of Revel to a buyer who wants to keep the
property open and retain the employees is the best thing for the workers, for
Atlantic City and for Revel, and Local 54 is committed to working with all
parties to save the jobs," he said.
For much of the past year, Revel has sought a buyer for the
property, which has remained eighth out of Atlantic City's 11 casinos in terms
of the amount of money won from gamblers. But it also kept the option of a
second bankruptcy filing as potential buyers expressed interest but failed to
pursue a deal.
The casino is owned by investors who gained control of it
during bankruptcy last year, swapping debt for equity in the property. The
transaction wiped out 82 percent of Revel's $1.5 billion in debt.
But even with that breathing room, Revel continued to
struggle. It acknowledged mistakes in marketing and operations, launching a
massive campaign to try to win back patrons. But that backfired when a
"You Can't Lose" promotion offering to refund slot losses angered
many customers who thought their losses would be refunded in cash. Instead,
they were gradually credited to a Revel account, with restrictions on when the
credits could be used.
Since then, it opened a pool club and guest service on its
beach, lowered the price of some restaurant items, booked free entertainment
acts in a lounge and opened a new players' club.
All this occurred against a backdrop of increasing
competition from casinos in neighboring states; four new casinos will soon open
in New York. Atlantic City's casino revenue fell from a high of $5.2 billion in
2006 to $2.86 billion last year.
Revel has never been profitable since it opened in 2012. It
posted a gross operating loss of $21.7 million in the first quarter this year.
For all of 2013, it lost $130 million, up from the $110 million it lost during
the nine months it was open in 2012.
Source: ABC
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