|By Hoa Nguyen, The Press of Atlantic
City, Pleasantville, N.J.McClatchy-Tribune Regional News
March 22, 2013--Revel is worth only $450 million and needs four years before it becomes fully profitable, the $2.4 billion megaresort estimates in disclosure forms submitted in advance of a bankruptcy filing.
Putting aside interest, taxes, debt service and other nonoperating expenses, Revel lost $111 million last year and projects it will lose $43 million by the end of this year, according to disclosure forms submitted last week with the Securities and Exchange Commission.
The company estimates 2014 may be the first year the casino will bring in more revenue than what it takes to operate Revel, projecting $9 million in earnings before interest, taxes, depreciation and amortization.
Add in depreciation, interest and amortization expenses and it may take until 2017 before Revel will see positive net income, according to valuators who say in the disclosure statements the projections are based on assumptions and could be affected by factors such as the casino being unsuccessful in marketing itself to casino patrons or another storm shutting down hotel, restaurant and casino operations as Hurricane Sandy did.
The projections were used by the valuators from Moelis & Co. to place Revel's present value at between $400 million and $500 million.
The numbers were included in a nearly 400-page disclosure statement Revel sent to creditors as part of the casino's plan to file a prepackaged bankruptcy case. The company was to have filed for bankruptcy today but won't, though it expects to file shortly, Revel's chief restructuring officer Dennis Stogsdill said.
About 4,400 people work at Revel, with about three quarters of them directly employed by the megaresort and the other quarter employed by retail, food and beverage contractors.
According to the disclosure forms, Revel cannot continue to service the $1.5 billion in debt it carries and must "deleverage" that burden -- converting about $1 billion to equity into the company and leaving it with $272 million in debt -- or about 20 percent of its original burden.
"The debtors believe the plan, which contemplates a significant deleveraging, is in the best interest of all creditors," Revel said in the disclosure forms. "Any other alternative does not in any way realize or recognize the value inherent under the plan."
As part of legal requirements in preparing the disclosure forms, Revel estimates if the casino was sold immediately in the next six months rather than proceeding with bankruptcy, net proceeds would amount to between $246 million and $331 million, the company said in the forms.
The upcoming summer season is expected to be particularly pivotal to Revel's success because money made during those months will help sustain it during the other months.
"In the event that the Debtors are unable to generate excess cash flows in one or more peak seasons, the debtors may not be able to subsidize non-peak seasons," Revel officials said in the disclosure form. "Accordingly, unforeseeable events that affect attendance at Revel during its peak operating seasons may have a disproportionately adverse effect on the debtors' revenues and cash flows."
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