Revel's exit strategy from Chapter 11 bankruptcy was approved by a judge Monday, clearing the way for the lavish but financially troubled casino to restructure its finances and pump resources into better marketing and new amenities in time for the busy summer.
"I can conclude that withstanding the challenges that await the debtor - including difficult competing circumstances of the industry and Atlantic City as well - a reasonable prospect of success has been shown on this record," Judge Judith Wizmur said in approving the plan.
The exit plan will wipe out about $1.2 billion of Revel's $1.5 billion debt through a debt-for-equity swap with its creditors. Management says that by having less debt and significantly lowered interest payments, the casino will now ramp up its marketing efforts and reposition itself in a competitive and beleaguered Atlantic City gaming market.
Wizmur approved $250 million in debtor-in-possession (DIP) financing April 18. Under the plan, lenders approved $350 million in exit financing, which will be used to repay the DIP loan and other restructuring expenses.
"Even if you fix the capital structure - with the debt and equity - you still, at some point, have to generate a sustainable level of revenue," said Philadelphia bankruptcy consultant Robert Katz, who is managing director at Executive Sounding Board Associates Inc.
Casino revenue has been Revel's challenge, and the reason the casino - built at a cost of $2.4 billion - filed for bankruptcy 11 months after opening.
Last month Revel generated a mere $8.1 million from slot machines and table games. By comparison, market leader Borgata generated nearly $49 million.
Revel interim chief executive Jeffrey Hartmann, who was hired in March, announced last month that he was cutting 83 jobs. Fine Point Group, a consulting company, is now handling all marketing.
Hartmann said Revel's VIP slots and players' lounge was the first of several new offerings. On the way are designated smoking areas for gamblers; a 24-hour, three-meals-a-day, moderately priced restaurant called Relish; a noodle bar by celebrity chef Jose Garces; and a beach bar called HQ Beach Club.
Revel's attorneys had pushed for a speedy exit, within 60 days of the March 25 filing, in time for the Shore's peak season.
"The biggest challenge is going to be the competitive environment," said Dennis Stogsdill, of New York-based Alvarez & Marsal, who was brought in as Revel's chief restructuring officer. "But we are working feverishly to improve the property."
Added Hartmann: "The confirmation of our plan is the last major milestone of the restructuring process. We look forward to officially emerging from Chapter 11 by the end of this month with a rightsized balance sheet."
The reorganization will reduce Revel's annual interest payments from $102 million to $46 million - freeing up cash to cover operating expenses and improve cash flow.
Among those who have visited Revel recently were retirees Nancy Pike, 68, and husband Bill Pike, 67, of Winslow Township, Camden County. Although regulars to Atlantic City, they ventured into Revel only for the third time last week.
"I like it, but it's kind of dead. It's quiet," said Nancy Pike. "The market is so saturated now because of the casinos in Philadelphia and Pennsylvania."
She suggested that perhaps Revel needed to give people more incentives to come through its doors.
"We didn't understand in the beginning why they wouldn't give us comped [free] rooms, like the Atlantic Club," she said. "We appreciate getting comps."
Added Bill Pike: "If you're not going to feed me and give me a room, I'm not coming."