Brookfield Asset Management has been declared the winner of the auction for Atlantic City’s bankrupt Revel Casino Hotel, but while Brookfield may have won this battle, the war appears far from over. In the wee hours of Wednesday morning, Revel’s owners accepted the $110m bid made by a Delaware-based subsidiary of the Toronto-based Brookfield, which operates the Hard Rock in Las Vegas and the Atlantis Paradise Island casino in the Bahamas.
But the process by which Brookfield Property Partners made its winning wager is being contested by Glenn Straub, the Florida developer whose $90m ‘stalking horse’ bid ensured Revel’s auction would go ahead. Straub’s team had believed the auction had been adjourned with no result around 8pm on Tuesday, only to subsequently learn that Brookfield had submitted its $110m bid, which contained a 6am ‘take it or leave it’ expiry date.
Straub, who told Reuters he was willing to bid up to $134m for Revel, said he would “absolutely” challenge the auction result in court. Straub said he’d never seen such a “one-sided” process, claiming that the New York lawyers conducting the auction “said they weren’t going to accept any more offers unless you want to do it right now with no time for anyone to look at anything.”
Brookfield’s winning bid must still be approved by a US Bankruptcy Court judge on Tuesday (7). Straub, who stands to collect a $3m ‘breakup’ fee as consolation for having lost the auction, has vowed to pursue the matter through the appeals courts until he obtains satisfaction.
As for Brookfield, it plans to reopen Revel as a casino, releasing a statement that identified “material synergies” between the property and the two casinos already under its control. But Philly.com reported that Brookfield’s Hard Rock casino is struggling under $988m in debt and as recently as August Brookfield was warning US securities regulators that it lacked the funds to make interest payments on the casino’s debt. On Wednesday, a Brookfield spokesman told the Associated Press that the negotiations with the Hard Rock’s lenders wouldn’t affect the Revel purchase.