Brookfield US Holdings, the Toronto-based company that
bid $110 million for the defunct Revel Hotel Casino, has decided to walk away
from the transaction because of high power plant costs, according to a source
close to the situation.
The deal fell apart because ACR Energy Partners refused
to lower its $36 million annual energy deal, the source said.
"No buyer is going to come in and buy Revel until
they budge," the source said. "Today is a major hurdle. … There's
still a chance that ACR can come back [and lower the price], but they're
standing strong and they're not budging."
ACR helped build the power plant by raising $118 million
in municipal bonds, money it wants back dollar-for-dollar, the source said.
Meanwhile, the 3,000 employees that lost their jobs after the $2.4 billion
casino closed were expected to be re-hired.
"That's a fact. It was a done deal," the source
said. "[They] basically just caused 3,000 people [from being] hired."
The $3 million-a-month power plant situation had been one
of the major sticking points for any potential Revel buyer. The casino's
foreclosure was seen as a way to renegotiate that deal, experts say.
"If they didn't close the property, [the buyer]
would have to pay $3 million because it would have transferred," Roger
Gros, publisher of Global Gaming Business Magazine, told me in an earlier interview.
"Now, if it goes through foreclosure and [Revel] sells to a company, that
contract doesn't go with it. They would be responsible for renegotiating with
the energy company, which is losing everything also because there's no other
way they can supply anybody but Revel."
Gros also said: "They can't just unplug from the
energy company and have somebody in there. They're hardwired into the building
[and] pipes are underneath the street. It's essential to work with this company
and vice versa."
Brookfield also owns the Hard Rock Hotel & Casino in
Las Vegas and the Atlantis Paradise Island in the Bahamas.
"We're pretty excited about owning the newest and
highest quality asset in Atlantic City," Coley told the Philadelphia
Business Journal shortly after the purchase was finalized back in October.
"It's pretty consistent with our history of contrarian investing and value
basis."
Brookfield previously placed bids of $94 million and $98
million for the casino that closed on Sept. 2. The casino's second bidder,
Glenn Straub from Florida, raised his own bid from $90 million to $95.4 million
but eventually lost out to Brookfield.
Source: Philadelphia
Business Journal
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