Glenn Straub Received $3 Million as the Stalking Horse Bidder in the Revel Auction
Glenn Straub says he wants a discount for his troubles, according to a court filing reported by CNBC. In court documents filed by Glenn Straub and his development company, Polo North, Straub described improprieties in the auction process that led him to bid higher than he normally would have in the process.
Straub Wants $87 Million Price Tag
Straub wants to buy the Revel Casino for $87 million, instead of the $95.4 million bid he made under the Polo North Country Club label. Straub’s lawyers say he wouldn’t have bid more than his original $90 million stalking horse bid, if he had known about the “significant and numerous improprieties” in the auction process.
Part of the Florida developer’s complaints revolved around the secrecy behind the bidding process. He says he was not told about the additional bidder in time to fully study the situation, while the auction process itself allowed the other bidder (Brookfield Management) certain advantages, such as private consultation with the Revel Casino lawyers.
Brookfield Management No Long Involved
Eventually, Brookfield could not renegotiate energy costs with the cooperative which supplies Revel Casino its power. The payments were $3 million a month and Brookfield Management, a gaming and leisure company out of Toronto, decided their business model would not work. When the negotiations stalled, Brookfield announced online that they would be pulling out of the process.
Soon after, Revel Casino lawyers asked the judge in the case to void Brookfield’s $110 million bid and to award Polo North with the winning bid. Revel announced it would keep the $11 million deposit paid by Brookfield, as per the terms of the contract.
Discount Due to Irregularities
Glenn Straub also wants a discount for the trouble he’s had. He claims the $87 million price is simply the $90 million he originally paid minus the $3 million he believes should be discounted due to the stalking horse bid. He’s already pocketed that money for having lost the bidding after a late second bidder arrived, but would prefer to keep the stalking horse bid, because it was given to him beforehand.
Because Revel Casino is keeping the $11 million fee it received, Straub believes it is fair that he should be allowed to keep his $3 million fee. According to the filing, if “the auction process was deficient to the extent the auction significantly and adversely affected”, then the judge should remove the fees and allow the bidding process to start over again, with a new auction process altogether. Since no one has entered the bidding to this point and the one rival has left the process, Straub presumably would be the easy winner in a new bidding process–perhaps at a lower price.
Judge Burns to Decide Jan. 5
Judge Gloria Burns is expected to hear the case on January 5, when she will decide the arrangements for the sale of Revel Casino. All of the various possibilities described might happen.
Revel Casino’s Rise and Fall
Revel Casino opened to a great deal of expectation in April of 2012. It was a Vegas-style casino resort in the middle of working-class Atlantic City, with a record price of $2.4 billion for a Jersey casino. But the venture entered the gaming industry during a down time for business, when the U.S. economy was bad and the northeastern business community was saturated due to new casinos in New York and Pennsylvania.
When the casino closed in September 2014, it became a symbol of Atlantic City’s ambition and fallen dreams, at the most elaborate and largest skyscraper in the city–but also the most failed gaming venture in the Boardwalk’s history. Revel was one of four casinos which closed its doors in 2014, while the Trump Taj Mahal also went through bankruptcy. It is unknown whether the casino will re-open for gaming business, or whether it will become the so-called genius academy or rail link Glenn Straub once claimed he was seeking to open.
