Two days after the operator of Revel in Atlantic City announced it was seeking up to $100 million in additional financing to stay afloat, a second credit agency has lowered the struggling casino's credit ratings.
Moody's Investors Service on Wednesday announced it had lowered Revel's credit ratings to Caa2 from Caa1 and its senior secured revolver and term-loan ratings to Caa1 from B3 - evidence of growing concerns over the casino's slower-than-expected start.
Cash generation at Revel is "significantly below the rate necessary for Revel to maintain an adequate level of liquidity and support of its current debt burden," the Moody's report said.
On Friday, Standard and Poor's lowered the corporate credit rating for Revel from B- to CCC.
Gaming analysts say the lowered ratings will not affect Revel's attempt to increase its revolving line of credit to $100 million.
The casino said Monday it was asking lenders for up to $100 million in new financing to get it through the rest of this year and 2013. Revel said it had received $70 million in commitments.
The additional money comes on top of the $50 million add-on Revel received in the spring from a consortium of banks.
Moody's said the decision to lower Revel's ratings "considers the significant shortfall in the company's revenue and earnings."
According to an Aug. 17 report by the New Jersey Division of Gaming Enforcement, Revel reported net revenue of $55 million and a gross operating loss of $35 million, or $18 million excluding onetime pre- opening charges, for the second quarter.
Standard and Poor's shared similar concerns in its downgrade: "The outlook is negative and reflects our expectation that cash flow generated at the Revel Resort is unlikely to grow to a level sufficient to meet fixed charges."
Joe Jaffoni, a spokesman for Revel, said Wednesday the company generally does not comment on credit reports.
"Look, there are a lot of things that are going very well, and the call to lenders on Monday highlighted that," he said.
Jaffoni said Revel was taking a more aggressive marketing approach and was focusing on driving up gaming revenue, which has ranked it eighth among the dozen Atlantic City casinos every month since opening on April 2.
Revel generated just $17.5 million in total gambling revenue in July, just slightly more than $14.9 million made in June from its 2,450 slot machines and 160 table games.
"We would not be satisfied with gaming revenue of $17.5 million," Jaffoni said. "But food and beverage and ADR (average daily rate for a room) are doing very well.
"But slot gaming is really where we are going to make a much more focused push," he said.