Atlantic City’s Revel casino has been sold after all—pending a court hearing—and for significantly less than originally proposed.
Florida developer Glenn Straub and Revel officials kept negotiating the sale despite a judge’s ruling that their initial deal could be terminated. That led to a new deal with Straub buying the property for $82 million.
Judge Gloria Burns never entered a final order terminating the sale, allowing for further negotiations.
For Straub, it’s an even better bargain than originally thought as he had offered $95.4 million for the property at a bankruptcy auction. The casino property cost $2.4 billion to build.
But nothing has come easy for Revel in its bankruptcy and the site’s main energy provider, ACR Energy Inc., has already asked the court to block the new deal and liquidate the property, converting the Chapter 11 bankruptcy to a Chapter 7 liquidation. The company is trying to recoup about $32 million it says it is owed under its deal with the former casino.
Straub and Revel were unable to close the original purchase agreement due to appeals from tenets of the building—which operated a successful nightclub and restaurants at the property—and due to the disputes with ACR Energy. Revel moved to terminate the deal after Straub missed a closing deadline earlier this month.
The new deal still requires court approval. Straub has placed the $82 million for the purchase in escrow to help ensure that this time the sale goes through. A closing date of March 13 has been set.
“For the first time in the Chapter 11 cases, the debtors now have a definitive purchase agreement that provides for a fully funded purchase price, specific performance, and certainty of closing,” Revel said in its motion asking the court to approve the deal.
The deal, however, does not appear to have settled the issues between the tenants and Straub.
The tenants have been fighting to stay at the property for the duration of their leases and to protect about $16 million in improvements they made to the property. They appealed a bankruptcy sale order that allowed those leases to be terminated and attained a U.S. District Court order blocking that portion of the previous sale agreement.
The new deal seems set regardless of how the tenant’s actions play out in court. Lawyers for Straub told the Associated Press that at the new sale price Straub is prepared to deal with whatever the courts decide regarding the former tenants.
Straub said he “is currently negotiating with several of the tenants with an eye towards being open and operational” for the summer.
The new deal also leaves room for Straub to back out of the deal if ACR turns off the power to the building—which it has been threatening to do—before the closing date. Straub has said negotiations with ACR are also underway, but the company still moved to block the sale.
ACR said it was owed more than $12 million before Revel filed for bankruptcy in June, and the casino has added about $20 million more in unpaid bills since then.
In its motion to block the sale, the company said Revel’s handling of the case has burdened the property with “tens of millions of dollars” of unnecessary costs and a bankruptcy loan that will leave unpaid claims from ACR and others, according to a review by Reuters.
The casino has “no likelihood of rehabilitation” and should be foreclosed under the control of a trustee, who could sell assets more quickly without incurring high administrative costs, ACR said.
Burns is scheduled to hold a hearing on the sale this week.
Straub, through his company Polo North Country Club Inc., said that he plans to spend $50 million on the exterior of the building and another $50 million making the hotel lobby more accessible to guests and adding a medical component to the property’s spa facility is a press release.
Polo North and its affiliates are debt-free, the statement said, and won’t be slowed by lenders or the municipal bond market. The overall refurbishment of the property should take three years and will “help change the image of Atlantic City from a predominately gaming destination back to a world-renowned resort town,” Straub said.
“Clearly, with two bankruptcy filings in less than two years, the Revel Hotel & Casino is in need of innovative management,” Straub said in the statement.
In subsequent interviews, Straub outlined some of his plans for the property.
“We’ll open part of the hotel. We probably don’t need all 50 stories,” Straub told NorthJersey.com, adding that the new Revel—though that name won’t be used—will be very different than the former site. At least 11 stories remain unfinished, and Straub apparently has no intention of completing them.
“We’ll be shifting things around to make it more of a resort,” Straub said, adding that much of the focus of the medical facility will be researching how to lengthen people’s life spans.
Straub said that his plans do call for a casino at the property including using the old casino’s original slot machines and opening more private gambling rooms for “high-end” international visitors.
“Gambling is a niche, a hobby, a fun thing to do,” Straub told the website.
This is the third time Revel has been close to being sold counting Straub’s first attempt. Last year Brookfield Asset Management actually won a bankruptcy auction for the property at a price of $110 million, but walked away after being unable to settle with ACR Energy.
