Has the Revel Casino Been Sold to Denver-Based AC Ocean Walk? Moody's Rates Possible Owners' Debt
Linda Loyd and Harold Brubaker | Philly.com | December 12, 2017 2:41pm
Dec. 11--Is the Revel casino hotel in Atlantic City under agreement of sale?
Moody's Investors Service, a credit rating agency hired by companies to rate debt, reports that Denver-based AC Ocean Walk LLC has presented financial documents to buy the failed Revel for $200 million and plans to invest an additional $175 million, for a total capital investment of $375 million.
Moody's identified the proposed new owners as Denver-based developer Bruce Deifik; Winding Trail Properties, controlled by Frank Ruocco; and other minority investors. The casino's proposed reopening is May 2018, Moody's said, citing financial reports submitted by AC Ocean Walk, but not an agreement of sale.
According to the proposed financial plan, AC Ocean Walk would operate 100 gaming tables, 2,000 slot machines, 1,399 hotel rooms, pools, a spa, night clubs, and 13 restaurant options.
The shuttered Revel's owner, developer Glenn Straub, said Monday the Revel is not under agreement of sale. He said he knew nothing about the Colorado company wanting to buy it.
"I know who Moody's is, but I don't know who in the hell this AC group is. I would know something like that," Straub said. "We've told everybody, we don't know who these people are. They come out of the woodwork. I think they try to make news."
Atlantic City Mayor Don Guardian's chief of staff said that the administration had no confirmation that the casino has been sold, or is close to being sold.
"A couple times we've thought it's been sold, or there's been a buyer, and it turned out not to be true," said Chris Filiciello. "Or the funding didn't come through. At this point, we don't have any confirmation."
This is the third time in recent months that a report has surfaced that a deal may be in the works to acquire the Revel. On Oct. 30, paperwork was filed with the Atlantic County Clerk's Office of a "notice of settlement contract of sale." However, it was not signed and did not list a purchase price.
According to Moody's, the Revel "is being acquired for $200 million -- well below the estimated $2.6 billion cost to build. The new owners will invest another $175 million to reopen in May 2018 for a total invested capital of $375 million."
Moody's analyst Peggy Holloway, who authored the report, could not be reached Monday.
Moody's assigned a B3 Corporate Family rating to AC Ocean Walk and a B2 rating to the proposed $175 million five-year first-lien term loan. Both are considered sub-investment grade. The new owners plan to put $125 million in equity to finance the acquisition, and said they will spend $56 million on pre-opening and renovation costs, the report said. Approximately $255 million of rated debt is affected, Moody's said, noting that "the assigned ratings are subject to review of final documents."
Straub, whose Polo North Country Club Inc. bought Revel out of bankruptcy for $82 million in 2015, said Monday he is awaiting a court decision on his appeal to Superior Court to be exempt from a ruling by the state Casino Control Commission that he must obtain a casino license to reopen the Revel as a casino, though he intends to lease operations to another developer to run what he now calls the Ten casino.
"This has been going on for eight to 10 months, that everybody says we sold that place, or have a contract on the place," Straub said. "They come up with these stories. Anybody can make offers, don't get me wrong."
Another company, New York-based Keating & Associates LLC, announced last month that it was under contract to buy a one-acre development site on the Boardwalk next to Revel, which it also wants to acquire. The private equity firm said it has offered $225 million to buy the Revel from Straub.