In New Jersey, the state gaming regulator is reportedly scheduled to meet later today in order to decide whether it should approve an interim deal that would eventually lead to a private equity fund taking over control of the struggling Ocean Resort Casino.
Hedge fund takeover:
According to a Tuesday report from The Press of Atlantic City newspaper, the New Jersey Casino Control Commission is to consider an arrangement first made public last week that would see New York City-headquartered Luxor Capital Group increase its holding in an entity known as AC Ocean Walk from 34% to 83%.
The newspaper detailed that AC Ocean Walk, which is currently majority-owned by Colorado-based real estate developer, Bruce Deifik, paid $229 million a year ago in order to purchase the closed Revel Casino Hotel before re-opening the iconic Atlantic City venue in late-June as Ocean Resort Casino. It explained that this transaction was completed using a bridge loan from JP Morgan Chase and Company worth $110 million along with $122.5 million in financing from Luxor Capital Group.
However, the Boardwalk property has subsequently been unable to capture a significant share of Atlantic City’s nine-casino market with Deifik now eager to stand aside despite having paid off the debt with JP Morgan Chase and Company in June via a second loan of $175 million.
Should the New Jersey Casino Control Commission consent to the proposed arrangement, the newspaper reported that the former Chief Operating Officer for the now-shuttered Atlantic Club Casino Hotel, Eric Matejevich, would be designated as the principal trustee for Ocean Resort Casino. This experienced casino executive would then hold all of the venue’s interests until Luxor Capital Group was granted interim authorization via a process that could take up to 120 days.
In exchange for being granted primary ownership of the 20-acre facility, Luxor Capital Group has pledged to immediately pay down the principal balance owed to JP Morgan Chase and Company by some $50 million. The firm purportedly explained that it moreover wants to bring a buffet service to Ocean Resort and finish construction on twelve uncompleted floors in order to add an extra 500 rooms to the property’s existing 1,399.