The missed quarterly interest payment was for roughly $20 million.
According to sources familiar with the situation, Capital Research & Management Co. is one of the providers of a $250 million debtor-in-possession loan that will fund Revel's impending prepack bankruptcy filing, and Cap Re's senior vice president, David Daigle, is among the members of a steering committee of the casino owner's lenders.
Revel has a restructuring support agreement with its lenders, including a super-majority of its lenders under its 2012 credit agreement led by JPMorgan Chase Bank NA; a majority of its term loan lenders under a 2011 credit agreement led by JPMorgan; and a supermajority of holders of its 12% second-lien notes, according to filings made with the Securities and Exchange Commission on Tuesday.
Overall, some 65% of its lenders have agreed to support the restructuring, the filings disclosed.
Revel, which offers more than 1,800 hotel rooms with ocean views and a 130,000-square-foot casino, plans to make a prepackaged bankruptcy filing by March 15, SEC filings said.
The company hasn't yet decided the bankruptcy court where it will file its petition, according to a source familiar with the situation, who said Revel will enter Chapter 11 with $1.5 billion in debt.
In order to fund its prepack filing, lenders of its 2012 credit agreement will provide the company with a $250 million debtor-in-possession loan to fund its reorganization, the SEC filings said. The DIP loan will roll up $205 million in prepetition debt and provide the company with $45 million in new money. The DIP will be repaid through an exit loan.
The terms of the DIP and exit loan, however, weren't filed with the SEC.
Under the May 3, 2012, credit agreement, Revel owes $48.38 million on a first-out revolver plus $1.9 million in letters of credit and $125 million on a second-out term loan.
Through the plan, Revel's term loan lenders involved in the 2011 credit agreement will swap their debt for 100% of the company's reorganized common stock. Second-lien noteholders will receive $70 million in secured new notes.
Revel owes $895.5 million, plus $20.6 million in interest, on its 2011 term loan credit agreement, which has JPMorgan Securities LLC as lead arranger and syndication agent and Morgan Stanley as the joint bookrunning manager.
The company also owes $384.74 million in 12% second-lien notes due March 15, 2018. U.S. Bank NA is the indenture trustee on the notes.
According to data provided by Thomson Reuters, Cap Re holds a 17% stake in Revel's notes. A spokesman for Cap Re, Chuck Freadhoff, said the firm doesn't discuss its holdings.
Other reported debtholders Canyon Capital Advisors LLC and Chatham Asset Management LLC couldn't be reached for comment.
General unsecured creditors will be repaid in full under the prepack, while holders of warrants and the company's prepetition equity will be wiped out.
Revel plans to start soliciting its creditors to vote to either accept or reject its prepack by March 8. It needs to win confirmation of its prepack by May 15 and have it take effect by May 30 under the terms of its restructuring agreement.
According to a company statement, released Tuesday, the prepack will cut Revel's debt by more than $1 billion through the debt-for-equity swap.
"The reduction of debt service expense this agreement facilitates will greatly improve Revel's cash flow to better support day-to-day operations," Revel chief investment officer Michael Garrity said in the statement. "This restructuring positions Revel for long-term success by providing the company with the operational flexibility to invest in the growth of our business."
According to the statement, the casino won't use any taxpayer funds to finance its restructuring.
The restructuring is expected to be completed early this summer, the company statement said.
Even though the casino missed the interest payment on its term loan on Tuesday, lenders have agreed to a forbearance, SEC filings said.
Revel, which has more than 2,000 slot machines, nearly 100 table games, electronic tables and a poker room in its smoke-free resort, wasn't able to accelerate its traffic and earnings fast enough to pay its debt, said Keith Foley, Moody's Investors Service senior vice president of the corporate finance group, in a phone interview.
"This was a risk from the get-go," he asserted, noting that Atlantic City was in decline when Revel was being built. "They had borrowed a lot of money to finance the construction of the hotel and casino and they needed to ramp up strongly to meet its debt obligations and payments."
Hurricane Sandy, which battered the Atlantic City boardwalk in late October, also didn't help the struggling casino's fortunes given the falloff in patronage.
But Revel's downfall is really rooted in its unsustainable capital structure.
"Revel has fallen dramatically short of where they should have been at this time to make their capital structure work," Foley said.
Revel tried making a series of amendments to its debt to provide it with relatively small amounts of additional liquidity to bridge some trouble spots, but it wasn't enough, he added.
Casinos in Atlantic City have been struggling for many years as gaming in neighboring states, such as Connecticut and Pennsylvania, has grown more popular because they're more conveniently located for some people, Foley explained. Gaming in Pennsylvania, in particular, has been expanding for the past few years at the expense of Atlantic City.
He believes Atlantic City will only continue to struggle as competition from Delaware, Maryland, New York, Pennsylvania and Rhode Island increases.
Since Revel opened last April, the Atlantic City gaming market continues to be soft. In fact, instead of fostering growth, "Revel may just be cannibalizing the business from other Atlantic City casinos," Foley said.
Revel had an $86.8 million net loss for the third quarter ended Sept. 30, compared to a $34.5 million net loss for the third quarter of 2011. The company had a $221.2 million net loss for the first nine months of 2012.
In SEC filings, the company listed its assets at $1.15 billion and its liabilities at $1.39 billion, as of Sept. 30.
Revel is being advised by Marc Kieselstein and Nicole Greenblatt at Kirkland & Ellis LLP. Kieselstein and Greenblatt couldn't be reached for comment.
Alvarez & Marsal is its restructuring adviser and Moelis & Co. is the company's investment banker. Cooper Levinson is gaming counsel to Revel.
Moelis spokeswoman Andrea Hurst refused to comment on the adviser working on the restructuring. An Alvarez & Marsal spokesman didn't return calls.
John J. Rapisardi at Cadwalader, Wickersham & Taft LLP, who is counsel to JPMorgan, couldn't be reached for comment. The bank's gaming counsel is Michael & Carroll.
Andrew Rosenberg and Elizabeth McColm at Paul, Weiss, Rifkind, Wharton & Garrison LLP are counsel to the steering committee of lenders. The steering committee's gaming counsel is Fox Rothschild LLP. Rosenberg and McColm couldn't be reached comment.
The members of the steering committee weren't disclosed in SEC filings.
Thompson Hine said partners Roy Hadley Jr. and John Watkins joined its corporate transactions and securities and business litigation practice groups, respectively. For other updates launch today's Movers & shakers slideshow.
The origination partner with The Riverside Co. talks about manufacturing M&A with private equity senior editor Jon Marino. More video