Brookfield Backs out of Revel Deal

Brookfield Backs out of Revel Deal

21 Nov 2014 | 10:03 Author: King, George

Brookfield Asset Management Inc, the Toronto based firm, has backed out of the deal to purchase the bankrupt Revel casino in Atlantic City after being confronted with a $36 million annual utility bill and being unable to successfully negotiate a reduction in payments.

Brookfield announced the cancellation of the purchase via a brief statement saying it had “terminated the Revel acquisition”.

The asset management company had made plans to purchase the casino for $110 million, outbidding Florida based property developer Glenn Straub who attempted to invalidate the sale, saying Brookfield lawyers had a conflict of interest.

The company had made plans to reopen the Revel as a casino-hotel but did not provide any details as to when it would happen. Brookfield also owns and operates the Atlantis Resort in the Bahamas as well as the Hard Rock Hotel and Casino in Las Vegas.

Revel’s Alternative Buyer

Brookfield’s withdrawal could pave the way for Glenn Straub, the Florida property developer, to acquire the former casino. Straub was the first person to bid on the bankrupt casino but was eventually outbid by Brookfield, who he took to court in an attempt to invalidate the sale. The attorney for Glenn Straub, Stuary Moskovitz, has said that he has three options he could pursue if he chose to purchase the Revel. Firstly, Straub could pursue his appeal to invalidate the court-approved sale which would see him receive the property for $90 million.

The second option is for Straub to drop his appeal and pay $95 million, the final amount Straub bid before losing to Brookfield’s $110 million bid.

Finally, Straub could choose to walk away from the deal completely leaving the bankrupt casino ownerless.

“All three are viable options,” Moskovitz commented when talking to press, but added he had not spoken to Straub yet and probably wouldn’t until Thursday.

Revel Casino

Straub’s Plans for the Revel

There have been several options for the revamping of the Revel and Straub has been very vocal of his plans to stay away from reopening the Revel as a casino. Among viable alternatives, Straub has revealed plans to transform the casino into a “Genius Academy” where the planet’s best and brightest would gather to tackle humanity’s most pressing problems.

Straub also spoke about plans for a second tower, a high speed ferry to transport people directly to and from Manhattan, “Super Jumbo Jets” to fly in Arabian businessmen and even a ski resort complete with elevator-equipped artificial mountains.

Despite Brookfield puling out of the deal, Atlantic City Mayor, Don Guardian is remaining relentlessly optimistic on the whole affair as well as the future of Atlantic City in general.

“I am sorry to hear that the Brookfield Transaction was not completed,” he said to press. “Although Brookfield would have been a good fit for Atlantic City, we will continue to attract new investors. Atlantic City is a resilient city, and better days are still ahead of us.”

Bankruptcy Judge Approves Revel Casino Tax Deal

In an update on the saga of Revel Casino, the Federal Judge in charge of the Revel Casino bankruptcy hearings, Gloria Burns, approved a $26 million settlement between the Revel Casino and Atlantic City that will provide both a tax cut for the closed casino as a much needed cash injection for the beleaguered New Jersey City.

During the bankruptcy hearings held in Camden, New Jersey, Judge Gloria Burns also indicated that she would be approving a request, on behalf of the Revel Casino, to increase the size of the casinos $61 million bankruptcy loan from Wells Fargo, to pay for the tax settlement.

“It gets cash in the door by year-end,” says Revel’s attorney John Cunningham, during a hearing that was conducted via a conference call.

Settlement to Cut Revel's Final Tax Bill by $7million

The settlement, which will cut Revels final tax bill by $7 million, was agreed upon if the casino would agree to drop its court case to have its property taxes reduced.
The now defunct casino, which shut its doors in September owes the approximately $33 million in taxes, interest and penalties to the State of New Jersey. Unfortunately, tax collectors have failed to generate any bids at the auction of the casinos tax debt which took place earlier in the year, which was one of the main reasons why negotiations began for the reduction of the casinos tax bill.

Atlantic City turned to the State of New Jersey for a short-term loan of $40 million last week after it was forced to reduce a bond sale this month, before scrapping it entirely.
Tax revenue from the many casinos on the boardwalk contributes approximately 70% of the city’s total budget, according to research and rating’s firm, Moody’s. The Atlantic City municipal budget has been weighed down by the ongoing financial woe’s being experienced by the city.

Four of the city’s casinos have already shut down this year and the fifth, the Trump Taj Mahal’s future is still uncertain following a string of court battles and strikes. An affiliate of Caesars Entertainment Corp, a company that owns three Atlantic City casino, is also expected to file for bankruptcy in the early parts of 2015. Another concern on the already burdened city whose unemployment rate is increasing every month.

During the first quarter of 2015, the city will hope to issue $140 million worth of bonds in an effort to pay property tax appeals won by the casinos. However, it appears that there is nothing that can be done to prevent the downfall of the once famous gambling mecca and only time will tell if Atlantic City will be able to bounce back.

 

George King
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A Writer, a Sailor and a purveyor of Facetiousness: Ladies and Gents, we give you... George "the" King

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