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Lender takes over Resorts in A.C.

ATLANTIC CITY - The keys to this Shore town's first casino are about to be handed over.

ATLANTIC CITY - The keys to this Shore town's first casino are about to be handed over.

Resorts Casino Hotel's current owners and its new ones exchanged and signed scores of documents via fax and e-mail throughout today to seal the deal.

Dan Heneghan, spokesman for the New Jersey Casino Control Commission, said closing the transaction was complicated by the fact that it involved "a number of parties in multiple different time zones," including Los Angeles and New York.

On the same day that Resorts' fate was being altered there were new signs that the future of Atlantic City's gambling industry looks grim.

Revenues for the 11 casinos fell 13.4 percent last month compared with November 2008, and for the first 11 months of this year, the casinos generated $3.7 billion, down 13.5 percent from the same 11-month period a year earlier.

Alan Marcus, a spokesman for Resorts' co-owner Nick Ribis, said that Ribis was delighted with the transfer of ownership and that both parties were "anticipating success at the property."

"It's safe to say that a transaction like this has never taken place, in which you have the lenders becoming equity holders with a management team in place to continue to run the casino," Marcus said of the Resorts deal. "For the employees and customers, it's basically a seamless transaction. They are not going to see any difference."

The Boardwalk casino, which opened May 26, 1978, had not made a payment on its $360 million mortgage since October 2008. On Aug. 14, it filed a petition with the state gambling commission to transfer ownership to its lenders, which include Wells Fargo Bank N.A.

Under a deal reached last month and approved by the commission, the lenders agreed to cancel nearly $381 million in debt in exchange for equity ownership.

Resorts' former owner, Colony Capital L.L.C., of Los Angeles, ceded its equity interest to Ribis. He will manage the casino, which employs just under 2,200, under a six-month contract that could be renewed.

Title to the casino was conveyed to RAC Atlantic City Holdings L.L.C., a new entity wholly owned by Wells Fargo Bank N.A. as trustee of the securitization trust.

With the deal, Resorts becomes the first Atlantic City gambling hall to be taken over by a lender. In Las Vegas, the practice has become common, as smaller casinos are unable to compete and major resort projects find it increasingly difficult to acquire the financing needed for completion.

Earlier this year, the tiny Greek Isles Casino was seized by its lender, which foreclosed for $47 million.

Last year, the planned Cosmopolitan Casino on the Strip was taken over by Deutsche Bank AG after its developer defaulted on more than $900 million in loans. The bank is moving forward on completing the $3 billion-plus project.

As one of the smaller casinos in Atlantic City, Resorts has struggled against bigger, flashier rivals such as the Borgata and the Trump Taj Mahal.

Last month, Resorts' revenue declined 21.4 percent to about $14 million, down from $17.8 million a year ago. It was the third-largest decrease among the city's 11 casinos.

Only Trump Plaza and Caesars had bigger declines last month: down 25.8 percent for Trump and 23.1 percent for Caesars.

But even the market-leading Borgata had an 8.0 percent decrease in revenue last month, to $52.5 million, as competition from new slots parlors in Pennsylvania intensified.

Pennsylvania's nine casinos - with a combined 24,770 slot machines - made $166.3 million in gross slots revenue in November, up nearly 27 percent from a year ago, when only seven casinos were open.

"It is truly exciting to watch this growing industry produce revenues that are being returned statewide to assist our citizens in a number of ways," Gregory C. Fajt, chairman of the Pennsylvania Gaming Control Board, said in a statement.

PhiladelphiaPark Casino & Racetrack, the state's top-grossing casino, made $28.3 million last month and is set to move into an expanded facility Dec. 18. In addition, openings are planned next year for Philadelphia's proposed SugarHouse Casino and a smaller casino resort at the Valley Forge Convention Center.