Wells Fargo, Creditors Reach Deal on Revel Loan

By Tom Corrigan 

Following 11th-hour negotiations, lawyers representing the Revel Casino Hotel's bankruptcy lender and unsecured creditors unveiled a settlement on a vigorously contested $125 million financing package for the defunct Atlantic City, N.J., resort.

Judge Gloria M. Burns of the U.S. Bankruptcy Court in Camden, N.J. said during a hearing Friday that she would enter an order approving the financing package after unsecured creditors agreed to withdraw their objection to the deal.

Under the proposed settlement, the lender, Wells Fargo, will share $1.35 million of any proceeds from the sale of the property to a Florida developer with unsecured creditors.

Wells Fargo also agreed to set aside an additional $150,000 of sale proceeds to fund possible litigation that could lead to greater returns for creditors.

Judge Burns has yet to sign off on the settlement, which must be approved no later than Feb. 16, according to the terms of the deal. Should the settlement ultimately fall apart, unsecured creditors would regain their right to object to the financing package.

"Effectively, all bets are off," said Thomas Kreller, a lawyer for Wells Fargo, referring to the consequences if the settlement fails.

Lawyers convened Thursday, but the final language of the settlement had yet to be worked out. An interim financing package had been set to expire at the end of the day on Friday, pressuring the two sides to complete an agreement.

Had the two sides failed to reach a settlement by noon on Friday, Judge Burns said she was prepared to issue rulings to settle any remaining sticking points.

The proposed settlement didn't resolve a lingering objection from ACR Energy Partners LLC, which operates the power plant that supplies Revel's energy needs and is located next to the resort.

Judge Burns struck down that objection at Friday's hearing, saying ACR had previously waived its right to object to the deal.

Wells Fargo, Revel's primary lender before it filed for bankruptcy, has provided bankruptcy funding through a series of interim court orders, but a final order that proposes to prioritize the bank's debt over other creditors had been met with stiff resistance.

The final financing package approved Friday calls for an $83.1 million roll-up of Revel's existing debt on top of about $42 million in new bankruptcy loans.

Revel, which cost $2.4 billion to build, filed its second Chapter 11 case in June. After initially failing to find a buyer, Revel shut down in September, throwing more than 3,000 people out of work.

Earlier in January, Judge Burns approved the sale of the boardwalk property to Glenn Straub, the Florida developer, for $95.4 million. The sale to Mr. Straub, who has said he plans to invest as much as $500 million to revitalize Atlantic City, must close by Feb. 9.

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