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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 - 22:06 | 3258126 AssFire
AssFire's picture

Why don't they just double down on red until they win with large bets at other casinos...

Oh, it's rigged- like the market, and central banks??

Tue, 02/19/2013 - 22:09 | 3258127 cynicalskeptic
cynicalskeptic's picture

The whole government fixation with gambling is a sure sign of how screwed up this country is.  When I read that part of the old US Steel complex in Bethlehem PA was being used for a casino I knew we were doomed.   The US has gone from creating tangible usable 'things' to sucking loose change from its populace.  The Yonkers Raceway Casino outside NYC is known as the 'recycling center' - sucking back Social Security payments from the old ladies at the slots.  Not an atypical business model.

Even if you thought gambling was a viable endeavor (discounting the moral and ethical aspects of gambling as a whole and the fact that where illegal games have better payouts), it is NOT viable when you've got Casinos all over the place.  Between Nevada's gambling empire, racetrack bailout casinos in NY, Atlantic City's attempt at a 'revival' the riverboat casinos along the Mississippi and Gulf Coast, and 'native American' casinos all over the place - from Foxwoods in CT to every damn truckstop in the West - WHERE IS THE 'DISPOSABLE INCOME' for people to blow in these places?  You sure don't have Chinese whales betting millions in Iowa or Boondocks Nevada.  You DO have old Chinese who worked their tails off from Queens taking busses up to Foxwoods or AC for the free roll of quarters and cheap lunch.

Vegas is a doomed business model - requiring massive amounts of energy to simply exist in the desert - requiring people to drive or fly ther to spend moeny they no longer have to gamble.  Seems like the rest depend on local old peopel blowing their retirement income.

Tue, 02/19/2013 - 22:34 | 3258219 Yes_Questions
Yes_Questions's picture

 

 

Ah but Vegas does still have the allure of sin.

One need not bring money to gamble with, but spend on the other fun, much of which still ends up in the coffers of the businesses there.

But, I could not disagree: the model must include lots and lots of dough handed over by those who like to place bets with their money.

Watch as Vegas Casinos get behind legalization of other vice options and you'll know you were right.  Anything to keep the lights and and dollars flowing.

Tue, 02/19/2013 - 23:45 | 3258406 CH1
CH1's picture

Ah but Vegas does still have the allure of sin.

True, but that could be duplicated (and surpassed) almost anywhere. The politicians just figure they have more to gain by looking righteous.

Wed, 02/20/2013 - 01:04 | 3258528 ersatzteil
ersatzteil's picture

"The allure of sin", minus legalized possession in small amounts, legalized prostitution and absolute VIP for any American with cash to burn.

"Hello, Tijuana? It's Vegas, you win."

Tue, 02/19/2013 - 23:15 | 3258332 Peter Pan
Peter Pan's picture

Dear Cynicalskpetic,

Agree with you 100%. The problem is that everything has turned into a gamble in America. Real Estate, shares, property etc. Even the endless string of wars has been a gamble in terms of a payout because the primary goal was just to feed the corporations that survive off conflict. Nothing it seems is an investment because the whole socio/political/economic environment has disengaged itself from the free market and  a basic modicum of virtue.

The double or nothing attitude of the USA is sadly veering towards nothing and there is NOTHING that can be done about it. Just put on a seat belt made of gold and brace yourself.

Wed, 02/20/2013 - 08:29 | 3258838 jerry_theking_lawler
jerry_theking_lawler's picture

PP,

Obviously you have not seen the same economy as I have. In this economy, those items are considered ATMs due to BB policies of free money...

Wed, 02/20/2013 - 00:32 | 3258485 Alpha Monkey
Alpha Monkey's picture

I'm holding out hope that in the wake of the failed casino model, drugs will be legalized (and naturally taxed for schools and healthcare...).

Tue, 02/19/2013 - 22:10 | 3258143 PUD
PUD's picture

All the casinos with "all you can eat' buffets patronized by that ignorant fat fuck will chapter 11 shortly too. Casinos are insane. Another tax on the stupid robbing them of their coin that they could have spent on diet pepsi and twinkies at Walmart

Tue, 02/19/2013 - 22:13 | 3258154 dick cheneys ghost
dick cheneys ghost's picture

Or Carnival Cruises

Wed, 02/20/2013 - 00:29 | 3258482 Alpha Monkey
Alpha Monkey's picture

Which are just floating casinos with all you can eat buffets.

Tue, 02/19/2013 - 22:10 | 3258144 max2205
max2205's picture

Cue accounting trick with Sandy funds

Tue, 02/19/2013 - 22:12 | 3258151 Bobbyrib
Bobbyrib's picture

That has to be part of it! I think you are on the right track. Afterall, they have to rebuild the Jersey Shore. Why? I have no fucking clue.

Tue, 02/19/2013 - 22:10 | 3258145 Cursive
Cursive's picture

Bankruptcy is the new symbol of Success.

Tue, 02/19/2013 - 22:35 | 3258222 Bobbyrib
Bobbyrib's picture

A lot of states and counties are going to be very successful if bankruptcy is the new symbol of success.

Tue, 02/19/2013 - 22:15 | 3258158 buzzsaw99
buzzsaw99's picture

None of that money will go toward  fixing up the "scruffy" neighborhoods and neither will any of the Sandy billions.

Tue, 02/19/2013 - 22:16 | 3258163 Seasmoke
Seasmoke's picture

Revel, Xanadu , Sandy ....... Christie is a fucking fraud

Tue, 02/19/2013 - 22:19 | 3258166 Yen Cross
Tue, 02/19/2013 - 22:21 | 3258182 Bobbyrib
Bobbyrib's picture

Maybe AC becomes the low income housing paradise NJ residents are bound to pay for within the next decade.

Tue, 02/19/2013 - 22:30 | 3258211 otto skorzeny
otto skorzeny's picture

insure it for $50 mil and "greek remodel" that bitch

Tue, 02/19/2013 - 22:39 | 3258233 Yen Cross
Yen Cross's picture

Good comment Otto. +1

Tue, 02/19/2013 - 22:47 | 3258255 Pseudo Anonym
Pseudo Anonym's picture

not that the toupee'd tv circus monkey donald trump hasnt done that yet

insure it for $50 mil and "greek remodel" that bitch

 

Tue, 02/19/2013 - 22:17 | 3258167 Smuckers
Smuckers's picture

Looks like they put everything on "Meteor will hit".
Might as well go to the track, and pick win, place or show up in my burger.

 

Wed, 02/20/2013 - 04:14 | 3258694 StychoKiller
StychoKiller's picture

Wheels within wheels! :>D

Tue, 02/19/2013 - 22:25 | 3258175 otto skorzeny
otto skorzeny's picture

that's a couple of sleazy looking jews running that place. I think I got crabs just from watching those scabby bitches dance in the ads. didn't go-go girls disappear in the 60s? or is it just so a bunch of asshole NY investment bankers drop a few more bucks at the tables thinking they will get laid w/o having to pay for pussy(which they will anyway)?

Wed, 02/20/2013 - 02:07 | 3258616 Spigot
Spigot's picture

Doesn't even get close to the full flower of genuine moral depravity seen in Weimar Germany in the 20's.

Wed, 02/20/2013 - 08:39 | 3258858 Bicycle Repairman
Bicycle Repairman's picture

Be patient.  Wait for the hyperinflation.  Given modern techology and our "diversity" "we" will pass Weimar Germany and Nazi Germany at the same time.

Tue, 02/19/2013 - 22:20 | 3258181 TraderTimm
TraderTimm's picture

Bitcoin casinos and poker sites have been enjoying global revenue potential, since there aren't any regulations against it.

Tue, 02/19/2013 - 22:21 | 3258184 Colonel
Colonel's picture

"Revel" Lol. Revel in idiocy.

Tue, 02/19/2013 - 22:24 | 3258188 Redhotfill
Redhotfill's picture

What a crappy ad, I know when I think about going to a casino the thing I'm thinking about eating is a HAMBURGER?!.  WTF, yeah lets all go to Atlantic CIty to a casino to have an Effing burger....  because I wouldntwant lobster, a steak or shrimp,  no I want the burger.....  Lame.

Tue, 02/19/2013 - 22:27 | 3258201 otto skorzeny
otto skorzeny's picture

Moochelle O saw that ad with all of that shrimp and lobster and had AF1 fly her fat ass up there for some.

Tue, 02/19/2013 - 22:38 | 3258225 adr
adr's picture

I picture the early Simpsons episode where Homer ate the entire all you can eat fish restaurant and sued them for lying about "All you can eat".

"Your Honor, I'd like to show you just how much shrimp this man ate."

Men bring in bags of shrimp like the letters from Miracle on 34th Street.

"Mrs. Simpson. What did you and your husband do after you left the restaurant that night?"

"We drove around all night looking for another all you can eat fish restaurant."

"Your honor, does that sound like a man who had ALL YOU CAN EAT?"

Tue, 02/19/2013 - 22:47 | 3258265 Bobbyrib
Bobbyrib's picture

The ad agency who wrote that ad then produced it probably cashed the check immediately after receiving it. That ad was terrible.

Tue, 02/19/2013 - 22:25 | 3258193 q99x2
q99x2's picture

Turn that shack into a free range chicken farm and be done with it.

Tue, 02/19/2013 - 22:46 | 3258256 Bobbyrib
Bobbyrib's picture

Who would eat the chickens? AC is a filthy crap hole.

Tue, 02/19/2013 - 22:27 | 3258199 jumbo maverick
jumbo maverick's picture

Was watching one of the business shows the other day. This casino big wig was on touting how they were smarties because they are implementing gambling from your casino room.

That's right you don't even have to go to the casino anymore you just gamble from your hotel room probably over the tv.

I bet they won't bring you free drinks to your room. Suckers.

Tue, 02/19/2013 - 22:30 | 3258212 adr
adr's picture

They should have licensed the name of a Wall Street bank, Like The Goldman Casino or Morgan Casino. Then instead of numbers on the roulette wheel you put stock tickers. If you win the bet you get a share, if you lose the bet the casino gets the money to invest in AAPL, AMZN, LULU, etc.

Then the market becomes a true casino. The Revel could have been saved.

Tue, 02/19/2013 - 22:39 | 3258234 ekm
ekm's picture

Structurally there's no difference.

You go to a casino, you have to buy chips. If chips are $10/piece, you buy 5 chips and you entertain yourself for 1 hr.

If chips were $15k/piece, only few customers can afford to play, no suckers.

 

Same with the stock market. If chips were at S&P 400/piece, everybody would buy chips. But the chips right now at S&P 1500/piece. Only few customers can afford to play, no suckers.

Tue, 02/19/2013 - 22:49 | 3258270 Bobbyrib
Bobbyrib's picture

It sounds like either way the casino would win.

Tue, 02/19/2013 - 23:08 | 3258317 adr
adr's picture

Ahh, but just like Wall Street the player thinks he IS winning.

Wed, 02/20/2013 - 00:17 | 3258462 ekm
ekm's picture

Incorrect.
The casino wins only when there are customers.

JPM and GS with all other primary dealers have run out of customers.

Tue, 02/19/2013 - 22:37 | 3258227 Icantstopthinki...
IcantstopthinkingaboutNINJAs's picture

Interesting Yahoo Finance article considering their audience:

http://tinyurl.com/bhk8rmz

 

 

"Should You Renounce Your Citizenship?

18,500 comments in 6 days.  Here is one of them: "At some point a reasonable human being has to reflect on the society that has developed around him and wonder:
Do I have anything in common with these people anymore….?
Do we share any core values?
Or do we simply share the same passport cover?"" When my wife's assistant hairdresser talks about Sandy Hook as a hoax..... This feels eerily like when 3x inverse ETFs were a sure money maker, even my barber knew it was a sure thing.... shortly before these types of investments began to split... and split... and split... and split some more.


 

Tue, 02/19/2013 - 22:44 | 3258251 adr
adr's picture

Even my mother thinks thereis something fishy about Sandy Hook. When she saw the video footage she asked me where all the ambulances were. She called the non emergency fire department number one time because an outlet was sparking. Ten minutes later two ambulances, a ladder truck, and two cops showed up at the house.

30 kids get shot and there is one ambulance outside the school. Then when she saw Dormer was killed an hour before the State of the Union I think a light bulb went on. She cried the next time I saw her and said, "I think the government is killing people."

I said, "Mom, they've been doing it for a very long time. Trust me it's much better not knowing."

Tue, 02/19/2013 - 22:51 | 3258276 Icantstopthinki...
IcantstopthinkingaboutNINJAs's picture

The skeptic in me wonders...

What is the goal?

 

To make people skeptical... all the time? If so then people's "filtering" will become overloaded and instead of filtering out crap information, it will be filtering out all information since nothing can be trusted.

Is that a goal, an unintended consenquence?

Tue, 02/19/2013 - 23:04 | 3258308 adr
adr's picture

If you can't trust anything, then you won't trust anything. In effect you take yourself out of the game and out of the equation.

I went to one of the top universites in the world and studied a hell of a lot of stuff. What I learned is that once you know, there is nothing you can do unless you are willing to destroy yourself. Also that if you aren't part of the select few, you aren't going to get in.

Even if you do choose to try and make a difference by destroying yourself like Dormer, you will be labeled as a crazy madman and written off.

Tue, 02/19/2013 - 23:40 | 3258395 Uber Vandal
Uber Vandal's picture

For your consideration:

http://www.ritholtz.com/blog/wp-content/uploads/2011/11/rrxW1.png

(Hint, it's a goal)

Wed, 02/20/2013 - 04:58 | 3258719 bunnyswanson
bunnyswanson's picture

The goal? Gun control (confiscation).  9-11:  Patriot Act.  This is war done in a manner that would have been devised by only the most sinister minds.

Wed, 02/20/2013 - 08:44 | 3258871 Bicycle Repairman
Bicycle Repairman's picture

The internet allows plebs access to more information, so the old strategy of hiding information no longer works.  The new strategy is an overload of information.  Especially bogus information.  Good luck sorting it out.

Wed, 02/20/2013 - 04:48 | 3258714 bunnyswanson
bunnyswanson's picture

http://www.youtube.com/watch?v=-mlszDIRZb0

Sandy Hook was a hoax. 

The end justifies the means. 

Bon Voyage Mutherfukker!

 

p.s.  If America falls, we all fall down. 

Tue, 02/19/2013 - 22:39 | 3258236 TNTARG
TNTARG's picture
Between 13.4 and 16.5 million

Determining the exact number of children living in poverty can depend on what Census calculation you go by. More than 16 million children, or roughly one in five, were living in poverty in 2011, according to the U.S. Census Bureau’s official poverty measure (pdf). That is higher than any other age group.

It's too sad.

http://www.pbs.org/wgbh/pages/frontline/social-issues/poor-kids/by-the-n...

Do NOT follow this link or you will be banned from the site!