New Jersey casino regulators approved the transfer of ownership of the resort to a trust that will manage it while Luxor’s application for casino license is under review
The New Jersey Casino Control Commission approved Wednesday a joint petition for the transfer of ownership of Ocean Resort Casino to New York hedge fund Luxor Capital Group, The Press of Atlantic City reported.
Luxor and the property’s former principal owner, Colorado businessman Bruce Deifik, filed the joint petition on January 28. The three-member Casino Control Commission gave the nod to a complex financial arrangement that will make it possible for the Atlantic City Boardwalk casino resort to continue operating during the ownership transition period.
Luxor does not hold a license to operate casino gambling in the state, but yesterday’s approval by the Casino Control Commission allows for the creation of a special trust that will be controlled by a designated trustee. The trust will manage Ocean Resort Casino, while Luxor’s application for a casino license is under review by the New Jersey Division of Gaming Enforcement and the Casino Control Commission.
Eric J. Matejevich, a former Chief Operating Officer at the shuttered Atlantic Club Casino Hotel, was named as the trustee.
Commenting on yesterday’s approval, James Plousis, Chairman of the Casino Control Commission, said that the move would “not only maintain public confidence and trust in the credibility and integrity of the regulatory apparatus, but will advance the economic stability” of Ocean Resort Casino.
Luxor will now need to obtain an interim gaming license. The process could take up to 90 days, during which the Division of Gaming Enforcement will review the company’s license application, and another 30 days for the Casino Control Commission to set a hearing on the matter.
Once Luxor is granted interim authorization, it will be able to operate the hotel and casino resort, while its application for an actual casino license is under review by regulators. That process is much lengthier and more complex.
Ocean Resort Casino Lost $23 Million in Five Months
During yesterday’s hearing, the Casino Control Commission voiced its concern about the future of the Boardwalk property and revealed details about its financial issues. Ocean Resort Casino opened doors in late June, 2018. However, the property never managed to gain foothold in the Atlantic City casino market, lagging behind its Boardwalk rivals.
Casino Control Commission Vice Chairwoman Alisa Cooper said yesterday that she sincerely hopes the divestiture trust agreement would help Ocean Resort Casino survive.
Under the property’s casino license, it had to maintain a daily operating cash balance of at least $10 million, a casino bankroll of at least $11 million, and direct access to capital and debt service reserves of no less than $15 million. It also had to notify the Division of Gaming Enforcement if it fell below the required $36 million threshold.
However, the casino has not been compliant with those requirements since November. In addition, the property recorded operating losses of nearly $23 million between September and the first 24 days of January.
Luxor was one of the two primary lenders to Mr. Deifik, who bought Ocean Resort Casino last January for $229 million. The New York hedge fund is planning to invest $70 million, of which $50 million would be allocated to reduce the principal balance owed to the other lender – J.P. Morgan, and the other $20 million would be used to purchase majority ownership interest of the holding company of AC Ocean Walk, the operator of the Boardwalk property.
Luxor has also revealed plans to add a buffet at Ocean Resort Casino and to finish the 12 uncompleted floors in the middle of the hotel tower.
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