Update: Distressed Debt News: Revel to File for Chapter 11 in The Last Two Weeks of the Month

Second Update: Bloomberg reports that Revel will file a pre-arranged bankruptcy in late two weeks of the month.

Update : Sources close to the company have told Distressed Debt Investing the filing timeline is still on or before March 15th. We will be providing some analysis on the valuation of the bank debt over the weekend.

Distressed Debt investing originally reported that Distressed casino operator Revel Entertainment is set to file for Ch. 11 protection within the next 24 to 48 hours, according to two sources familiar with the matter. The company announced Feb. 20 part of its restructuring support agreement with lenders required it to commence Ch. 11 proceedings on or before March 15, but has been able to complete the process a week in advance of the final deadline.

Revel disclosed last night a last-minute amendment to its credit agreement for a new required reserve amount associated with loans used to complete certain capital expenditures and to change some minimum liquidity thresholds.

The change was likely in order to ensure dissident holders could not claim there is a default, as certain holders in the term loan and delayed-draw facilities were not happy with the plan, according to sources.

Revel’s main term loan debt was last quoted in the 50/52 context, unchanged from Tuesday, according to a source. As Reorg Research reported on Tuesday, meaningful blocks of Revel Entertainment’s bank loan traded hands recently, with the last trades at 49 – a jump from 40 last week, according to sources, on a handful of developments leading up to the company’s formal Chapter 11 filing. One seller even tried to come to market as high as 54, according to sources.

As the company mentioned in its RSA, the restructuring details include:

  • A consensual pre-packaged Chapter 11 filing
  • Reduction in debt load by over $1 billion through an exchange of debt for equity
  • Certain of Revel’s lenders will provide approximately $250 million in debtor-in-possession financing, approximately $45 million of which constitutes new money commitments and approximately $205 million of which constitutes prepetition debt
  • Revel to continue normal business operations and honor obligations in the ordinary course of business
Lenders signed onto that agreement include funds of Capital Research, JP Morgan, Wells Fargo and Canyon Capital. The other biggest holders in the debt have been a mix of institutional investors and funds including Franklin Resources, Chatham Capital and Oppenheimer, sources said.

Revel appointed Alvarez & Marsal’s Dennis Stogsdill to serve as CRO, according to a Feb. 28 announcement.

Revel also is getting financial advice from Moelis and Kirkland & Ellis in connection with the restructuring; as well as Brown Rudnick as special counsel and Cooper Levinson as gaming counsel.

Revel’s $850 million term loan due 2017, at L+750 with a 1.5% LIBOR floor, was put in place via JP Morgan in February 2011 to back development. Then in the spring it added a $50 million delayed-draw term loan to and in August increased its revolving credit to $100 million. The $125 million rescue facility got priority over the debt already in place via an amendment to the credit facility, which included a $25 million increase to the revolver.

 - Max Frumes



hunter [at] distressed-debt-investing [dot] com

About Me

I have spent the majority of my career as a value investor. For the past 8 years, I have worked on the buy side as a distressed debt and high yield investor.