|By Michael Clark, The Press of Atlantic
City, Pleasantville, N.J.McClatchy-Tribune Regional News
Feb. 18, 2011--ATLANTIC CITY -- Revel Entertainment Group successfully secured the financing needed to complete its half-built $2.8 billion casino project Thursday, ending months of uncertainty and potentially marking an upswing in Atlantic City's economic future.
Revel Chief Executive Officer Kevin DeSanctis confirmed Thursday that the company finalized a $1.15 billion funding deal at about 1 p.m., which will allow 2,000 construction workers to head back to the South Inlet site in an ambitious effort to complete the casino in 15 months. He said some construction workers were on site Thursday and that the number of workers there will steadily grow.
Workers call Thursday "a happy day." Click here for the full article.
Officials project the casino will employ 5,500 workers after it opens in summer 2012.
"You can hear the sigh of relief that just went through all of Atlantic County," said Ken Calemmo, chairman of the Greater Atlantic City Chamber, after hearing of the closing of the deal.
The company closed on two private loans for $850 million and $305 million, replacing Revel's most recent financing plan of three separate loans totaling the same amount. The deal allowed Revel officials to award about $600 million in contracts Thursday for the continued construction.
"I'm relieved," DeSanctis said Thursday. "This part of the process doesn't usually take four years, that's for sure."
DeSanctis declined to discuss the identities of the financial backers, referring to them only as a "consortium of institutional investors."
The completion of the financing deal puts an end to a string of bad news for the company as it struggled through a credit market collapse and a recession to establish final financing.
Revel officials announced it would cut 400 jobs from its construction site in late January 2009. Work stopped at the site about two months later, after the exterior was complete.
In early April 2010, Wall Street giant Morgan Stanley announced it would sell its ownership stake in the project, depriving the troubled $2.8 billion casino of its chief financial backer. Since then, Morgan Stanley has reported that its initial $1.2 billion investment in the unfinished project is worth just $40 million.
"It was tough there for a while," DeSanctis said. "If Revel was not going to get completed, it would have been very difficult for people. There would have been a cloud hanging over the city."
But things began to turn around for the project after Gov. Chris Christie publicly pledged to revitalize Atlantic City. DeSanctis said Christie spoke with his investors and ensured them the state was commited to the resort and its monopoly on New Jersey gaming. The state's Economic Development Authority also agreed to a $261 million tax reimbursement plan that will pump $125 million into infrastructure improvements in the South Inlet.
The Christie administration praised the latest development.
"That's good news, just what we wanted to hear," Christie spokesman Michael Drewniak wrote in an e-mail. "We hope to see things move forward in earnest now."
The project also has seen more than traditional support from the building-trade community, which has viewed the stalled construction as a potential source of much-needed employment.
James Kehoe, president of Plumbers and Pipefitters Local 322, confirmed Thursday that he recently traveled to Washington, D.C., to lobby the union's national leaders to invest members' pension money into the project.
He said labor leaders are debating how exactly to do the investment and that the specifics would likely be worked out within a week.
"This is the biggest thing to happen to the building trades in this city since gaming was legalized," Kehoe said.
But Revel's triumph Thursday does not signal the end of the company's obstacles.
Along with working to meet a completion deadline in just 15 months, the casino also has a labor dispute on the horizon with the city's largest union representing service workers.
Bob McDevitt, president of Local 54 of UNITE-HERE, says DeSanctis wants his casino employees to work independently from unions, based on meetings the two had at least two years ago. DeSanctis has denied the claim and has accused McDevitt of "bad behavior."
"Revel's given no indication that they want to be union," McDevitt said. "We're going to organize, and they're going to do what anti-union employers do. It's going to be a fight."
McDevitt has argued, and some gaming analysts have predicted, that Revel's opening could mean the end of two or three foundering Atlantic City casinos. McDevitt acknowledged that's the reality of capitalism, but the state's assistance to Revel is unfair. McDevitt opposed the state EDA tax break.
"If they're able to raise money in the market, that's great. That's what it's all about," he said. "But the state funding a casino where they've never funded one before, that's what I have a problem with. I don't think the state should have underwritten it. Especially when underwriting it means putting some of the places out of business and taxpayers out of work."
However, Atlantic City has seen its financial outlook improve recently with new investments in ailing casinos, including the fire sale of Resorts Casino Hotel and this week's purchase of Trump Marina Hotel Casino.
Trump Entertainment CEO Bob Griffin said Christie's early February announcement that Revel's financing was on the brink of completion enabled this week's sale of the Trump Marina to Landry's Restaurant Co. He said it also has fueled multiple inquiries about other Trump-owned assets.
"I don't think it's a question of who will go out of business," Griffin said. "It's a question of who will make the appropriate capital investments."
For now, DeSanctis and his employees can bask in this long-elusive victory. But there isn't much time to celebrate.
"For a while there, we were working with just a handful of people in the office and, at times, it was pretty quiet," DeSanctis said. "But you could see it today. We've re-energized the office. And we're laying out a challenge to everyone to get this thing done in 15 months. It's not going to be easy, but we got here, and we're going to get there."
Staff writer Juliet Fletcher contributed to this report.
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Copyright (c) 2011, The Press of Atlantic City, Pleasantville, N.J.
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