U.S. Bankruptcy Judge Gloria M. Burns said Thursday that she would approve the sale of the closed Revel Casino Hotel in Atlantic City to developer Glenn Straub for $82 million.
The long-contested sale - for slightly more than 3 percent of the property's $2.5 billion construction cost - is expected to close on the contract deadline of Tuesday, though many hurdles remain.
Straub said in court testimony that after the closing, he would reveal his $500 million master plan for Atlantic City, encompassing Revel and other projects. He also offered this solution for the beleaguered city, which lost four casinos last year: "Employment, to get rid of this negative attitude."
While the judge has yet to sign the order, she said she would. It would be the second time Burns has approved a sale of Revel to Straub.
Straub will lose the $82 million he has put on deposit if he does not complete the purchase by Tuesday.
The previous deal called for Straub to pay $95.4 million, but he failed to complete the purchase by a February deadline. He said he did not want to buy the facility if restaurants, stores, and nightclubs that have unexpired leases were going to remain. And they were pursuing legal action to stay.
Now he has no choice, unless he takes the tenants to state court.
The latest sale order does not seek to strip the tenants of their right to stay in the facility under their leases, some of which do not expire for 12 years.
The tenants "don't want this buyer," Warren Usatine, the lead attorney for unsecured creditors, told the judge. "You heard why. He's going to throw them out. He's going to sue them."
The biggest hurdle for Straub, if he takes over as expected, is reaching a deal with ACR Energy Partners L.L.P., Revel's utility supplier.
Other potential buyers have abandoned their efforts to buy Revel because they could not come to terms with ACR, which has just one customer, Revel, and $118.6 million in municipal bond debt.
It's not clear if the power will stay on after the sale to Straub is done.
Straub testified in his usual meandering fashion that ACR had offered him a discount for the first 14 or 18 months of his ownership.
But he was not impressed by the potential one-third reduction in cost for that period, to an annual rate of $24 million from $36 million. "I don't think that's a deal," Straub said.
Straub has long contended that he would find alternatives to ACR.
Straub also testified that he planned to buy the former Showboat casino from Stockton University, which has encountered roadblocks in its plan to turn the property into its Island Campus. The school confirmed Thursday that discussions with Straub were ongoing. Buying Showboat could give Straub access to Showboat's utilities for Revel.
Despite the uncertainty over utilities, Straub said he is ready to start spending money at Revel.
"$150 million will be spent on this project just to get open by the beginning of this [summer] season," he said.