Revel to become water park

2015-01-09

Reading time 1:49 min

(US).- Bankruptcy Judge Gloria M. Burns has made two rulings to clear the way for the Revel sale in Atlantic City to Florida investor Glenn Straub for USD 95.4 M. In her first ruling, Judge Burns declared that Revel can buy the property unencumbered by an agreement Revel had with the Casino Reinvestment Development Authority and by leases with restaurants, night clubs, and other tenants in the building. Burns also ruled that Straub may reject all the tenants' leases when he buys the property.

Burns said previously she had intended to approve the sale, but a sale order - required before the deal can be completed - was not entered because several objections needed to be resolved or formally put off until later. She settled those issues Thursday.

The CRDA agreement gave the development agency the right to do whatever it wanted with a 1.25 percent tax on casino revenues. The money from that tax, paid by all casinos, is used for development in Atlantic City.

Without auch an agreement, Straub can determine what to do with the money from the tax on casino revenues. "He does want input on how this money is used," Straub's attorney, Stuart J. Moskovitz, told Burns. "He thinks he can do a better job."

During a break, Straub, recalled visiting the resort with his mother when he was 8, long before the casinos took over. He said his interests in Atlantic City extend beyond the Revel property. For example, he spoke of building a US$ 108 million indoor-outdoor water park.

Straub is open to discussions with the tenants, but he wants to be able to move them around, Moskovitz told the judge. "Where these amenity tenants are located essentially prevents an appropriate use of the building," Moskovitz said.

The decision on the leases could be interpreted to mean that ACR Energy Partners L.L.P., which leased land from Revel to build a US$ 150 million plant that heats and cools Revel, must vacate that land. "We have no choice but to dismantle the plant and take away the machinery," said Stuart Brown, who represents ACR Energy.

ACR Energy's US$ 118.6 million in bond debt has been the source of a stubborn conflict among ACR, Revel, and potential buyers. After failing for months to reach an agreement on their own, the parties are now entering formal mediation arranged by Burns.

Straub has not decided whether to seek a court order to reduce the sale price. He has 30 days in which to close the sale. "The main thing we want is that this place not go back into bankruptcy again," Moskovitz said. "He wants to make sure whatever he puts there will succeed."

Revel closed Sept. 2 after little more than two years of operation, having never turned a profit.