Bruce Deifik, the operating owner of Atlantic City’s Ocean Resort Casino, has been ousted just six months after re-opening on the city’s Boardwalk.
Ocean Resort is the former Revel Atlantic City. Deifik led a group that bought the property for $229 million in January 2018 and re-opened it in June. It’s been reported that the Luxor Capital Group demanded Deifik’s departure, but that no other management changes would be made, and that property president Frank Leone would remain in charge.
Deifik told the Associated Press of the sale after reports surfaced that the casino was in financial trouble and that he was shopping the property around looking for a buyer.
Deifik would not identify the new company, which would assume majority ownership of the casino. He said the new owner will make a $70 million investment in Ocean Resort, which plans to remain open. Details of that “reinvestment” were similar to plans already announced when Deifik bought the property—the construction of a buffet, something Revel and Ocean always lacked, and construction of more than 400 hotel rooms on unfinished floors of the hotel tower.
“It has been truly an honor for myself and my family to have taken this property, opened its doors and brought back the players, the families, the convention guests and the sports betting enthusiasts,” Deifik said in a press statement. “My family and I want to thank the 3,000-plus employees at Ocean for their tireless work to bring our property to life and put it on track to become the best gaming property in New Jersey. If approved and closed, this next round of investment into Ocean will put this property on an exciting path to growth.”
Deifik said he and his family will retain a small, non-controlling ownership interest in the property, according to the AP.
The Ocean Resort casino opened June 27, but has struggled to find its place in the resort’s now nine casino market. The casino’s slots and table game revenue was under $12 million for November, the lowest total for any casino in the resort. Since June, the casino’s revenue has been about $84 million, again near the bottom of the Atlantic City market. The bright spot, however, has been the property’s sports book, which leads the market.
Deifik led a group that purchased the casino for $229 million in January 2018. Based on total revenue forecasts submitted to state gaming regulators prior to licensing in June, Ocean Resort’s executives estimated that in its first fiscal year the property would net $384.6 million.
To secure financing for the purchase of the property, two bridge loans were obtained by Deifik and various holding entities–$110 million from JPMorgan Chase Bank and $122.5 million from Luxor Capital Group, a New York-based hedge fund.
On June 4, a new term loan from JPMorgan for $175 million was completed and the initial $110 million borrowed was repaid. Records from gaming regulators state that the Deifik Family Partnership, a limited liability limited partnership with two general partners — Deifik and his wife, Nancy — were the only guarantors of the new term loan from the bank.
Reports said that Luxor, which also has an investment in the Cosmopolitan of Las Vegas, demanded the ouster of Deifik. Sources tell GGB News that the Deifik family, particularly son Jason, were circumventing casino management and making decisions without consulting them.
According to a report in the Press of Atlantic City, a lawsuit brought by the casino’s former nightclub manager charges that casino owner Bruce Deifik is shopping the casino for a possible sale.
Joseph Morrisey, the former nightclub manager at HQ2, filed a $10 million lawsuit against Deifik last month claiming he was forced out of a partnership agreement at the club after helping secure millions in financing for the casino prior to its public opening. He charges that Deifik is trying to eliminate anyone with ownership agreements in the property ahead of a sale.
The casino’s parent company is also facing liens from several construction contractors who say they have not been paid about $1.1 million they are owed. At least one lien, filed by Atlantic City-based Calvi Electric, was discharged, but a lien filed by Eastern Sign Tech claims it is still owed more than $579,000, according to Atlantic County records cited by the Press.
Ocean Resort opened on the same day as Hard Rock Hotel & Casino Atlantic City after a long stint in bankruptcy in which the massive property was closed. The property was purchased in 2015 by Florida-based real estate developer Glenn Straub, who paid $82 million for the property, but was never able to re-open it.