Judge Gloria Burns Approves Sale of Revel Casino

Federal Judge Gloria Burns approved the sale of Revel Hotel and Casino on Thursday, April 2, resulting in Florida developer Glen Straub purchasing the company’s assets for $82 million. At this price, Revel sold at a more than 96 percent discount from the $2.4 billion required to build the property, according to The Wall Street Journal.

Resolution

Now that U.S. Bankruptcy Judge Gloria Burns has approved the sale, lawyers for both Revel and Straub indicated plans to close the deal on Friday, April 3, The Associated Press reported. This particular transaction represented the fifth attempt to sell the hotel and casino, and Burns approved the deal in spite of last-hour protests from the property’s tenants.

Judge Burns had recently delayed the $82 million transaction to see if any parties could come in with a larger bid; however, none were received, according to The Wall Street Journal. During the hearing, Ramy Ibrahim, Revel’s investment banker, testified that Straub’s purchase agreement was “the only real offer,” even though Ibrahim had been in contact with up to 18 potential bidders.

Unfinalized bid

A group led by real estate executives Carl Goldberg of New Jersey and Howard Milstein of New York offered $88 million for Revel, but they also revealed that they had failed to broker an agreement for energy with the power plant that provides the hotel and casino with all of its heat, water, electricity and air conditioning, The AP reported.

ACR Energy Partners LLC, which built and now operates a custom facility, failed to come to terms with any bidders, including Straub, according to the news source. Court papers reveal that the plant receives more than $3 million per month on average in payments.

During the hearing, lawyers representing Revel’s former tenants and its former utility provider requested more time to complete this proposed transaction, The Wall Street Journal reported. However, both Revel and Wells Fargo, which has been providing bankruptcy financing, stated that available funding had been used and that potential buyers had run out of time to finalize a bid.

Thus far, Wells Fargo has provided $64 million in financing, and has stated that it no longer wants to put any money toward the situation, according to the AP. A lawyer representing the lender told Judge Burns that the case has been filled with “empty, false promises to persuade your honor there’s light at the end of the tunnel. Your honor: There isn’t a tunnel. It’s a hole. It gets deeper, and there is no light.”

Amid such statements, Judge Burns weighed in on the situation, according to The Wall Street Journal.

“I know there is an unhappiness with the buyer,” she said at the end of the hearing, the media outlet reported. “As of today, there’s nothing else definitive before the court.”

Broader plan

Following the hearing, Straub revealed that he bought the property as part of a larger plan to purchase several current or former casinos in Atlantic City, according to The AP. He refused to provide further details at the time, indicating he planned to shed more light on the situation on Saturday, April 4. In addition, he confirmed he had already bought the aforementioned properties.

After obtaining approval for the sale of the Revel hotel and casino, Straub will need to work with the tenants that were doing business in the property, the media outlet reported. These parties previously took legal action, appealing the $82 million deal with the Florida real estate developer, claiming the transaction would deny their property rights.

The disputes involving these tenants and ACR Energy Partners caused many of the proposed deals to fall through, according to The Wall Street Journal. Amid this situation, Straub intends to cancel all existing leases and contracts associated with the hotel and casino, including those involving ACR Energy Partners and the property’s tenants.

Given the unresolved situation with the power supplier, Straub stated April 2 that he plans to supply Revel with power through the use of temporary generators and boilers until he secures a more permanent solution, the media outlet reported. However, if climate control systems are shut off, it could result in these power sources suffering damage.

Plans for Atlantic City

As for his plans in Atlantic City, Straub revealed he intends to spend up to $800 million, according to The Wall Street Journal. The Florida real estate developer revealed his plan to upgrade the resort, allocating $300 million for changing up the entrances and lobby of the Revel property and building a second tower at the location.

In addition, Straub revealed that he plans to put $500 million into the area around the site in attempt to make it more appealing to families, the media outlet reported. Such a plan would involve a water park, polo fields, a renovated airport and a soccer franchise.