Atlantic City’s struggling yet high-profile Revel casino gets a $150 million life line
Interior of Revel in Atlantic City, NJ. Kevin Jarrett / Flickr.com
Revel’s big problem is that it was planned during the economic boom, constructed after big backers pulled out, used as political leverage by Governor Chris Christie, and way too nice looking for a place like Atlantic City.
Revel Entertainment Group LLC, the casino owner struggling to avoid default after Hurricane Sandy’s effects depressed already insufficient revenue, obtained $150 million in financing to help fund its gaming projects.
The company amended its existing revolving credit line and added a new $125 million term loan maturing in 2015 and an increase of $25 million to the revolving pact, Atlantic City, New Jersey-based Revel said yesterday in a statement. Revel used a portion of proceeds from the term debt, which pays interest at the higher of 10 percent or 9 percentage points more than the London interbank offered rate, to repay borrowings under the revolver, according to a regulatory filing.
The deal follows an agreement in August that doubled a credit pact signed in 2011 to $100 million. While proceeds will help fund new amenities such as a high-limit slot lounge that Chief Executive Officer Kevin DeSanctis is betting will boost sales, the company said in the filing that it doesn’t expect to generate enough money needed to comply with its financial covenants by June, which would result in a default unless lenders agree to amend or waive the rules governing Revel’s obligations.
“We appreciate the continued support and confidence of our investors, who have demonstrated a strong belief in our business model,” DeSanctis said in the statement. “The gaming segment is clearly the area where we need to see improvement and is our primary focus.”
Revel, whose construction stalled in 2009 after former owner Morgan Stanley abandoned the 1,800-room complex and lost more than $1 billion, opened in the spring before being closed for five days starting Oct. 28 because of Hurricane Sandy. Managers led by DeSanctis took over the project, borrowed $1.15 billion to finish it and won a $261 million tax break from New Jersey Governor Chris Christie, who is trying to revitalize Atlantic City.
Libor, which represents the rate at which banks say it would cost to borrow from another, fell to 0.308 percent today, matching a 16-month low reached several times this month.
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