By Salvador Rizzo/Courtesy of The Star-Ledger
LITTLE FERRY — Gov. Chris Christie said today that Atlantic City can still become a "mecca" for East Coast tourism despite Revel's plans to file for bankruptcy next month.
Revel, the struggling city's newest casino and a $2.4 billion project, announced Tuesday that it would enter a voluntary Chapter 11 bankruptcy and remain open after a rough start during its first year in business.
Once hailed as a game-changing resort that could pull Atlantic City back from the brink, the casino has not been able to turn a profit and has been eclipsed by competitors in the city and in neighboring states.
Through the bankruptcy process, Revel plans to convert $1.5 billion in debt into $1 billion in equity for its creditors — effectively giving them ownership of the casino instead of repaying the money.
Christie said the managed bankruptcy was nothing to fear and that it was in fact a show of confidence from Revel's investors.
"They're investing in Atlantic City," Christie said at a news conference in a firehouse in Little Ferry. "If they thought that there was no future there, they could close Revel down. Instead they're taking debt that they're owed legally and turning it into ownership. That's an investment by these folks in that hotel."
In 2011, the Christie administration approved a $261 million package of tax incentives for Revel over 20 years, the centerpiece of a plan put forward by Christie to revitalize the city. But none of that money has been paid out yet, Christie said, and it will be held until and if Revel becomes profitable.
"I told you, 'Give me five years to see if we can fix Atlantic City.' We're about two and a half years into that," said Christie, who is running for re-election this year. "So give me another two and a half years. You can call it a failure at the end of five if that's where it turns out, if that's where we wind up being, but I'm not ready to give up yet."
At the same time, Standard & Poor's, the Wall Street credit-rating agency, downgraded Revel's debt to the lowest level possible today because of its bankruptcy plans and because it will miss an interest payment on one of its emergency loans.
"Revel has indicated to lenders that as part of the restructuring, it will not make the interest payment," the S&P analysts wrote, downgrading the casino's debt from CCC to D.
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