Companies would suffer if Revel sale not salvaged

Municipal bondholders owed $118.9 million are at the center of a dispute that is threatening the sale of Atlantic City's bankrupt Revel Casino Hotel.

But two New Jersey companies, whose joint venture built and operates Revel's utility plant and owes the $118.9 million, could suffer significant collateral damage if efforts this week to salvage the sale are unsuccessful.

The two partners each have $20 million in equity at stake in ACR Energy Partners L.L.C., the plant that chills water for Revel's air-conditioning, provides hot water, and distributes electricity to the 47-story tower.

One is a subsidiary of publicly traded South Jersey Industries Inc., an energy company in Folsom with regulated and unregulated arms.

The other is privately held DCO Energy L.L.C., of Mays Landing. Through top management, including Joseph R. Jingoli Jr. and Michael D. Jingoli, DCO is affiliated with Joseph Jingoli & Son Inc., a national commercial builder and construction-management firm based in Lawrenceville, N.J.

Officials at South Jersey Industries and DCO could not be reached for comment Tuesday.

Brookfield Asset Management Inc., a Toronto real estate investment firm, said last week that it was dropping its $110 million offer for Revel because it was unable to get a better deal on utilities from the bondholders.

At the urging of a U.S. Bankruptcy Court judge, talks had been scheduled for Monday in hope of resolving the dispute between Brookfield and the bondholders, but it was not certain whether Brookfield representatives attended the meeting, or whether the meeting was even held.

A Brookfield spokeswoman declined to comment. A spokeswoman for Revel did not respond to a request for comment.

South Jersey Industries and DCO paid $40 million to take possession of the partly built utility plant from Revel's original backers, who ran out of money in June 2010 and halted construction on the entire $2.4 billion Revel complex.

ACR Energy borrowed $118.6 million in the municipal bond market to finish building the energy facility, which is behind Revel at Massachusetts and Oriental Avenues.

South Jersey Industries and DCO Energy are partners in several additional energy plants at regional casinos, including one at Borgata Hotel Casino & Spa in Atlantic City and a much smaller one at Parx Casino in Bensalem.

Other major projects for the partnership include a $90 million power facility for Montclair State University and the Hartford (Conn.) Steam Co.

The projects have solid returns on equity of between 15 percent and 20 percent, South Jersey Industries told investors in September.

But in its third-quarter results the company included a $10 million reserve for amounts Revel owes it, but did not write down the value of its $20 million investment.

That could change.

Brookfield's asset-purchase agreement expires Friday. The backup bidder in Revel's bankruptcy auction this fall, Florida investor Glenn Straub, has said in court that he also would not accept the terms of Revel's contract with ACR Energy.

Source: Philly.com