ATLANTIC CITY — Atlantic City’s Revel warned its staff Thursday that it will shut down this summer if a buyer can’t be found in bankruptcy court.
In warning letters given to employees, Revel said it is seeking a buyer for the struggling $2.4 billion casino but can’t guarantee one will be found. If not, workers could be terminated as soon as Aug. 18, Revel said in the letter.
Shortly after distributing the letters, Revel filed a Chapter 11 petition in federal bankruptcy court, its second in as many years.
Scott Kreeger, Revel’s president and chief operating officer, said the casino has obtained a $125 million loan from one of its existing financiers so it can operate during its stay in bankruptcy court.
A judge in Camden will hear Revel’s motions today, including requests to continue normal operations, paying workers and bills while under Chapter 11 protection.
Revel said the Aug. 18 date mentioned in the letter is not a deadline for a potential closure; rather it fulfills a legal requirement to give workers at least 60 days’ notice of a potential layoff.
It could not be determined how much Revel might sell for in a bankruptcy auction, but it is sure to be a discount. Wall Street analysts and some casino executives said last month that $300 million was too high a price.
A union that has been at odds with Revel since before it opened pegged its value in April at $25 million to $73 million.
Bob McDevitt, president of Local 54 of the Unite-HERE union, which won a representation election at Revel two weeks ago, pledged cooperation in the fight to save its workers’ jobs.
For much of the past year, Revel has sought a buyer for the property, which has remained eighth out of Atlantic City’s 11 casinos in money won from gamblers. But it kept the option of a second bankruptcy filing as potential buyers expressed interest but failed to pursue a deal.
The casino is owned by investors who gained control of it during bankruptcy last year, swapping debt for equity. The transaction wiped out 82 percent of Revel’s $1.5 billion in debt. But even with that breathing room, Revel struggled.
It has never been profitable since it opened in 2012. It posted a gross operating loss of $21.7 million in the first quarter this year. For 2013, it lost $130 million, up from the $110 million it lost during the nine months it was open in 2012.