Brookfield Asset Management can proceed with its purchase of Atlantic City’s Revel casino for 0 million after the sale was approved by a federal bankruptcy judge.
The approval from Judge Gloria Burns came despite several objections from the losing bidder–Florida-based developer Glenn Straub—who had made an initial bid of $90 million on the property and seemed likely to acquire the casino.
But Brookfield—which owns the Hard Rock casino in Las Vegas and the Atlantis Paradise Island casino in the Bahamas—stepped in at the last minute and won a bankruptcy auction for the property in a late-night/early morning bidding session.
Straub objected to the auction, saying he was denied information on competing bidders and didn’t have enough time to prepare a final bid to top Brookfield’s last offer.
Revel attorney have denied Straub’s allegations.
“The best news is Revel is going to reopen as a casino,” said John Cunningham, one of Revel’s attorneys. “It’s not going to be a university.”
Straub—who received a lot of publicity for his initial bid—had proposed a wide range of uses for the property, including turning part of it into a think tank and “genius university.”
Despite Straub saying he had intended to bid as much as $135 million for the property, he did not make the bid at the auction or at the hearing to approve the sale.
Revel’s attorneys told Burns that they moved to take Brookfield’s bid—which Brookfield said was only good for a few hours—rather than risk losing it on the hope Straub would make a higher bid sometime down the line.
“This is a disgruntled losing bidder,” Cunningham said. “Mr. Straub had to put his money where his mouth is. He didn’t do it. Our decision was to take the bird in the hand. It was too much money to risk.”
Straub also spoke at the hearing offering up his version of the auction. His testimony was described in some reports as rambling.
Straub told Burns that he suffers from a serious medical issue—he did not identify the condition—and had left his medication in Florida, jeopardizing his health. He said that the length of the auction affected him.
“I was wandering up and down the streets, which is what caused my medical condition,” Straub said. “It was cold, high anxiety. This is life and death here. How can they keep continuing to do this?”
Brookfield’s final bid was made with the provision that it was only good until 6am during the all-night session. That meant Straub had to counter bid by 5am, something he said he could not do at that late hour.
“I don’t know if I knew my name at 5:30 in the morning,” he said.
Burns, however, ultimately ruled that the auction had been run properly. She set Oct. 20 as a hearing date for other unresolved legal issues in the case.
Revel president Scott Kreeger told the Associated Press he was “excited by the decision of the court.”
“We conducted a comprehensive sale process that maximized the value to the estate,” he said. “Brookfield is a highly regarded company with extensive gaming experience. Their experience would give Revel a strong new owner with whom to chart a new course for success.”
Revel, which cost $2.4 billion to bid was only open for about two years before closing Labor Day Weekend. It is one of four casinos to close in Atlantic City this year.
Brookfield has not released its plans for the property, but has said it will remain a casino. The purchase, however, does not carry a provision that the company rehire any of the about 3,000 employees thrown out of work by the casino’s closing.
Under the sale, Brookfield acquires all assets needed to operate a casino such as gaming machines, equipment, computers, furnishings, and customer databases. But the agreement also reads that Brookfield “shall have no obligation to make any offers of employment to employees.”
Cunningham said Revel and Brookfield expect to close on the deal within 60 days. Brookfield is essentially buying the property for five cents on the dollar.
Bloomberg News reported that after the bid, bonds from Atlantic City fell to a six-week low. Still, many analysts feel that Brookfield could have great success with the property since it is not burdened by the debt of the previous owners and has its own database of players—something the previous owners lacked.
Straub, however, may not be done with his objections. After the hearing, he vowed to appeal the decision and got into a confrontation with a Revel advisor, reportedly shoving him.
According to the Press of Atlantic City, Straub said the advisor had made a “sleazy” comment about his mental capacity.
“I’m from West Virginia,” he told the paper, apparently to explain his reaction.
Straub, however, also told the Press that he is still interested in investing in Atlantic City. Straub has already expressed interest in the closed Showboat casino and also has toured a winery near Atlantic City for a possible purchase.
