WILMINGTON, Delaware (Reuters) - Revel, a lavish Atlantic City casino that opened less than a year ago, filed for bankruptcy protection late on Monday under a plan that would turn over control to lenders and eliminate more than $1 billion of debt.
The Chapter 11 filing, which was expected, culminates a rapid decline for a complex that cost $2.4 billion to build and had been expected to bringing Las Vegas-style glitz to a city where gambling revenue had fallen for several years.
Under the plan, Revel will slash its debt to $272 million from about $1.52 billion through a debt-for-equity conversion. The plan has secured more than the number of lenders' votes required for the court to approve it, Revel added.
"Backed by overwhelming lender support, we remain on track to complete our financial restructuring ahead of the critical summer season," Jeffrey Hartmann, Revel's interim CEO, said in a statement.
Revel expects to continue normal business operations throughout the restructuring. Lenders include Canyon Capital Advisors and Chatham Asset Management, and they are expected to become owners once it emerges from bankruptcy by June or July.
Located near the northern end of Atlantic City's boardwalk, Revel's wave-shaped complex opened on April 2, 2011. It includes a 1,800-room hotel, theaters, nightclubs and 14 restaurants, some helmed by celebrity chefs such as Michel Richard.
Its vast casino has more than 2,400 slot machines and nearly 100 table games.
Morgan Stanley (MS.N) originally owned most of Revel Entertainment Group LLC, which began building the casino, but sold its stake at a $932 million loss in February 2011 to investors led by Kevin DeSanctis. The new owners then obtained a tax package of roughly $261 million from New Jersey and lined up $1.15 billion of financing to help complete the project.
DeSanctis resigned earlier this month as Revel's chief executive. Hartmann, the interim chief executive, is a former chief executive of the Mohegan Sun casino in eastern Connecticut and has more than 20 years of experience in the gaming industry.
Backers had hoped Revel would become the next Borgata, a joint venture between Boyd Gaming Corp (BYD.N) and MGM Resorts International (MGM.N) that opened in 2003 and became Atlantic City's top-grossing casino.
Atlantic City, however, has lost its appeal and last year, the adjacent state of Pennsylvania overtook it to become the second-largest U.S. gambling market after Las Vegas.
The case is Revel AC Inc, Case No. 13-16253, U.S. Bankruptcy Court, District of New Jersey.