New Jersey Casino Files For Bankruptcy Ten Months After Opening; No Taxpayer Funds Will Be Lost This Time

Tyler Durden's picture




 

If it seems like it hasn't been even a year since the latest Atlantic City casino, this one with the surreal ads showcasing Revel Atlantic City, opened up, it is because that is exactly the case. Ten months to be precise. And just as quickly as it came, just as quickly did it file for bankruptcy. Moments ago, the company issued a press release that it would engage in a debt-for-equity prepack (with Moelis, K&E and A&M all advising) Chapter 11 which will be completed over the summer. The biggest losers here are not so much the original owners of Revel Entertainment Group, Morgan Stanley which three years ago decided to walk away from its entire $932 million sunk investment in the bankrupt hotel (instead of spending another billion to complete it), but the people of New Jersey, who just lost another investment opportunity as some $260 million in the tax incentives that were supposed to help the project along will never reach their intended target. From the WSJ:

[Revel] received a boost from the state of New Jersey, which over 20 years will send back $261 million in taxes from the project under an economic-redevelopment initiative. Most of that money will be used by Revel to spruce up the scruffy neighborhood and boardwalk around the casino. About $70 million will go into an account that can be used to pay initial interest on the mezzanine loan if the project doesn't meet projections.

 

The $70 million piece was a key late addition that helped secure the mezzanine funding, according to people involved in the financing process.

The other losers here are the unnamed debt holders who in February 2011 also injected $850 billion in first-lien and $305 million mezz loans which would eventually become 85% of the equity - the CEO of the firm refused to discuss whose these investors were, referring to them only as a “consortium of institutional investors.” JPMorgan acted as advisor for Revel in connection with the debt raise. Nearly a year later, JP Morgan advised lenders to sink another $150 million in good money after bad: "The casino resort said it amended its agreement with JP Morgan Chase Bank to provide for additional money to help pay down existing debt and to fund operations. Most of it consists of a new $125 million loan."

The continuation of the abandoned investment was the brainchild, and pride and glory of one Chris Christie who then said "the $2.4 billion Revel is one of the most spectacular resorts he's ever seen and expects it will motivate other Atlantic City casinos to revitalize their properties. "I think that one of the things that Revel will be is a catalyst for additional modernization and investment by the other casinos to say, listen, if we grow more people here coming to the region and we're offering something that looks nice further down the boardwalk, maybe people will want to look there as well." As it now stands, the Revel will only be a catalyst for further bankruptcies as industry after industry finds out what a tapped out consumer with no access to $1.8 trillion in excess reserves truly means.

The other losers are the usual suspects: unions.

While construction unions have been backers of the project, the hospitality-workers union and conservative groups have criticized the state help. Unite Here, which represents workers at Atlantic City's casinos, has complained that the project could force older casinos to close, which would mean more laid-off workers.

 

Mr. DeSanctis on Thursday said the project hoped to instead expand the market by appealing to business groups and leisure travelers who aren't visiting Atlantic City these days.

So much for that. As for the fresh start capital structure, the lenders will roll some $205 million in pre-petition debt into a DIP, and provide a fresh $45 million in new capital, as yet another batch of good money is thrown after bad money that once was good money also thrown after bad, and so on.

As part of the restructuring, certain of Revel`s lenders will provide approximately $250 million in debtor-in-possession financing (DIP), approximately $45 million of which constitutes new money commitments and approximately $205 million of which constitutes prepetition debt.

But the funniest part from the pre-packaged bankruptcy press release is the following line:

No tax payer funds will be used to finance the restructuring.

Ladies and gentlemen: we have just found the first insolvent Wall Street casino (literally) that did not get a taxpayer bailout.

And now: the surreal Revel ad as promised.

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Tue, 02/19/2013 - 21:59 | 3258107 CharliePrince
CharliePrince's picture

snake eyes

Tue, 02/19/2013 - 22:06 | 3258112 prains
prains's picture

I'm tellin ya just go with the "mega fat" barbie pitch it's a winner and will sell like hot cakes- patent pending

Tue, 02/19/2013 - 22:10 | 3258146 ACP
ACP's picture

The bankruptcy release is bullshit. Taxpayer funds will pay for it, eventually. Whether it's to bail out the seller or to fund the new buyer, taxpayer funds WILL be used.

Tue, 02/19/2013 - 22:15 | 3258160 Pure Evil
Pure Evil's picture

You can bet taxpayer funds are being used if any Wall Street bank is involved.

Tue, 02/19/2013 - 22:25 | 3258194 ss123
ss123's picture

Just joking!

This casino was for entertainment purposes only.

Tue, 02/19/2013 - 22:34 | 3258218 francis_sawyer
francis_sawyer's picture

We need more casinos & casino revenue...

~~~

Please ~ Do it for the KIDS

Tue, 02/19/2013 - 22:37 | 3258229 Yen Cross
Yen Cross's picture

 Do it for "Paul Krugman"...  He's long infrastructure< $6 trillion dollars ago.

Tue, 02/19/2013 - 22:43 | 3258246 Boris Alatovkrap
Boris Alatovkrap's picture

Paul Krugman = pure unadulterated idiocy ^ 2 (but is good for Russia competitive, no!?)

Wed, 02/20/2013 - 00:05 | 3258446 NoDebt
NoDebt's picture

When you run a state-assisted casino into the ground, you know the consumer is up a creek without a paddle.

Wed, 02/20/2013 - 02:00 | 3258607 Spigot
Spigot's picture

Opening a casino 6 months before a major storm destroys $120 billion in real estate in your immediate neighborhood probably was a factor. De-Wealthing Effect certainly at play.

Wed, 02/20/2013 - 05:45 | 3258739 CompassionateFascist
CompassionateFascist's picture

Kane+Gorshin. Sez all. Meanwhile, Christie's on his knees in front of Obama, begging for more debtbux. I am so going to enjoy the collapse Of ZOGamerica. 

Wed, 02/20/2013 - 08:51 | 3258882 quasimodo
quasimodo's picture

I was gonna say I am so going to enjoy the collapse of that fat azz Christie, but then realized the last thing joo nershey's  need is a tidal wave.

Wed, 02/20/2013 - 09:26 | 3258944 overmedicatedun...
overmedicatedundersexed's picture

like most states: gambling is the credit card they use to keep going, taking money outta the local economy, as long as christie gets his cut, and the local mob pols get theirs its all good. but then that's giving bookies a bad name. got lotto?

Tue, 02/19/2013 - 23:17 | 3258338 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

deflation in the hooker market detected

Wed, 02/20/2013 - 01:55 | 3258596 Spigot
Spigot's picture

Major Fail, please report to the Service Desk for an important message!

Tue, 02/19/2013 - 22:21 | 3258157 Pure Evil
Pure Evil's picture

No wonder the place imploded, the Revel ad totally sucked and the chicks couldn't dance even if dildo's fell out of their asses.

Those dancers reminded me of the Flaunt dancers on that total shit show on TruTV called Full Throttle Saloon.

Wed, 02/20/2013 - 08:07 | 3258807 PeeramidIdeologies
PeeramidIdeologies's picture

We suck at dancing to techno over here... It's all in the foot work, and you need some space. Then you got a party...

Tue, 02/19/2013 - 22:07 | 3258131 Son of Loki
Son of Loki's picture

Revel is not GM.

Tue, 02/19/2013 - 22:27 | 3258202 disabledvet
disabledvet's picture

they could be GM's bondholders actually...

Wed, 02/20/2013 - 11:08 | 3259265 TruthHunter
TruthHunter's picture

No Revenues lost?

New Jersey probably already spent the projected revenues...

Tue, 02/19/2013 - 22:01 | 3258111 Clever Name
Clever Name's picture

You know I'm born to lose, and gambling's for fools,
But that's the way I like it baby,
I don't wanna live for ever!

Tue, 02/19/2013 - 22:09 | 3258140 Midas
Midas's picture

You need to lower your microphone...

Tue, 02/19/2013 - 22:01 | 3258114 NoWayJose
NoWayJose's picture

Just waiting for the announcement that they will be given authorization to accept EBT cards - that will save the casino.

Tue, 02/19/2013 - 22:05 | 3258128 Bobbyrib
Bobbyrib's picture

Any loses from EBT card holders will be charged to the residents of the wonderful state of NJ.

Tue, 02/19/2013 - 23:31 | 3258376 wee-weed up
wee-weed up's picture

We don't need no steenkin' EBT card authorization!

Tue, 02/19/2013 - 23:41 | 3258397 Teamtc321
Teamtc321's picture

EBT, drinking fine wine and eatin' free cheese the OboMao way. 

http://www.youtube.com/embed/xEYFFiEnUjQ?feature=player_detailpage

Tue, 02/19/2013 - 22:03 | 3258117 Stuck on Zero
Stuck on Zero's picture

Taiwan and Korea have the foundries.  China has the manufacturing.  Brazil has the agriculture.  The USA has bankrupt casinos.  Cool.

 

Tue, 02/19/2013 - 22:06 | 3258130 cynicalskeptic
cynicalskeptic's picture

China (Macao) has the casinos that are making money - they're even keeping that money at home now (thoguh Edelson is taking a nice cut)

Tue, 02/19/2013 - 22:07 | 3258136 prains
prains's picture

The USA has bankrupt casinos.

 

don't forget; AND mega fat barbies too!!

Tue, 02/19/2013 - 22:03 | 3258118 BidnessMan
BidnessMan's picture

The Miss America pageant announced last week they were going back to Atlantic City from Las Vegas.  So Atlantic City casinos have that going for them....

Tue, 02/19/2013 - 22:10 | 3258142 AssFire
AssFire's picture

I trashed you for having that knowledge.

Tue, 02/19/2013 - 22:29 | 3258209 ss123
ss123's picture

LMAO! One of the funniest posts ever.

And I'm not demeaning the OP.

Tue, 02/19/2013 - 22:59 | 3258292 BidnessMan
BidnessMan's picture

Just your typical ZH renaissance man serving my community with fun facts

Wed, 02/20/2013 - 01:57 | 3258601 Spigot
Spigot's picture

Quite well served! Thank you!

Tue, 02/19/2013 - 22:04 | 3258120 realtick
realtick's picture

Tyler, why are you guys paying no attention to commodities? Beans don't agree with you?

 

Chartist Friend & Beans

 

Tue, 02/19/2013 - 22:04 | 3258121 spekulatn
spekulatn's picture

That's a shame.

Tue, 02/19/2013 - 22:04 | 3258123 booboo
booboo's picture

Once had a girl ask me to kiss her where it stinks, I drove her to New Jersey.

Tue, 02/19/2013 - 22:07 | 3258134 Bobbyrib
Bobbyrib's picture

If she wanted to go further east, you could have taken her to Staten Island too.

Tue, 02/19/2013 - 22:18 | 3258170 Pure Evil
Pure Evil's picture

Old New Jersey joke:

What's the difference between a Jersey girl and trash?

 

 

At least trash gets picked up.

Tue, 02/19/2013 - 22:19 | 3258178 Bobbyrib
Bobbyrib's picture

LOL.

Tue, 02/19/2013 - 22:24 | 3258190 AssFire
AssFire's picture

In Jersey when someone farts in the car- they roll the windows up.

Tue, 02/19/2013 - 22:39 | 3258231 Stuffs And Stuff
Stuffs And Stuff's picture

Why wasn't baby Jesus born in New Jersey?

 

 

Because they couldn't find 3 wise men, or a virgin.

Tue, 02/19/2013 - 23:00 | 3258294 toys for tits
toys for tits's picture

Why does California have all the attorneys and New Jersey has all the pollution?

 

New Jersey got first pick.

Tue, 02/19/2013 - 22:08 | 3258124 Yen Cross
Yen Cross's picture

 Intrade was recently cut off from U.S. clients... Good thing I shop offshore!  I state facts and get junked!

 Happy fuckface http://www.cnbc.com/id/49976076/All_Bets_Are_Off_Intrade_Cuts_Off_US_Cus...

Tue, 02/19/2013 - 22:04 | 3258125 Bobbyrib
Bobbyrib's picture

LOL. I don't believe that the state of NJ will not find a way to fuck us (the residents of the state) over somehow. I mean, they have to find a way. We rival Chicago in terms of corruption.

I hope AC sinks into the ocean. No one harmed of course. The city is a total craphole and a disgrace to even NJ. You can't walk two blocks from the boardwalk without feeling as if you are going to be robbed. The rooms available in the old outdated casinos are "only" about $300 a night on the weekends. The debt bubble for the common man popped back in 2007/2008. Earth to dipshits who run the casinos time to downsize.

Tue, 02/19/2013 - 22:22 | 3258185 otto skorzeny
otto skorzeny's picture

who cares if anyone is harmed-whenever I have encountered anyone from the upper eastern seaboard they are the most obnoxious, unattractive group of people I have had the displeasure to meet.

Tue, 02/19/2013 - 22:32 | 3258217 Bobbyrib
Bobbyrib's picture

While I do hate most residents of this state, I don't wish any harm on them. People from different parts of the country irk each other.

For some reason, we are raised to dislike chit chat. It's not that we can't make small talk, it's that we would rather go about loathing our lives. I don't like loud mouths either. I tend to keep my judgmental opinions to myself in person.

Tue, 02/19/2013 - 22:45 | 3258253 Papasmurf
Papasmurf's picture

You've met snookie and jwow?

 

Tue, 02/19/2013 - 22:35 | 3258223 disabledvet
disabledvet's picture

You do have a Senator who claims to have 200,000 in assets. I'm actually not sure what to say to that. I know the many times i've been there i never felt like i needed to don my "friar tuck" get up. http://www.youtube.com/watch?v=3caoy4cIXac

Tue, 02/19/2013 - 22:43 | 3258245 Bobbyrib
Bobbyrib's picture

For some reason, the people of this state elect the biggest, most corrupt assholes we can find. From time to time I think of actually buying property in this state, then I remember how corrupt it is and as many of you point out how wealth will be confiscated through property taxes. It's not like we have the highest in the nation...oh wait.

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