Second verse, same as the first: Revel deal hits a familiar snag
12/27/2014 | Real Estate Blog
The course of true love and the sale of Revel Casino may never run smooth. With Brookfield US Holdings LLC officially out of the running as buyer of the Atlantic City complex — we wrote about the deal’s demise in our Nov. 21 post — the sellers turned to runner-up bidder Glenn Straub. Straub, however, has not backed off his belief that the initial auction was unfair.
Straub has asked the court to deduct more than $8 million from his bid to make up for the irregularities he claims marked the auction. The discount would lower his initial $95.4 million bid to $87 million. What’s more, the discounted price would be about $20 million lower than Brookfield’s winning bid.
According to court documents, Straub’s claim mirrors his suspicions immediately following the auction in September. He claims his organization was not apprised of Brookfield’s bid and asserts that the auction was marked by “significant and numerous improprieties.”
Straub walked away from the auction with a $3 million “breakup fee,” a kind of consolation prize for acting as the stalking horse bidder only to lose the auction. Now that he is the high bidder, he would normally forfeit the fee. However, Straub now requests that Revel credit him that amount, arguing that the casino did not refund Brookfield’s $11 million deposit.
When Straub challenged the initial auction, the court examined the evidence and ruled in favor of Revel; the auction had been conducted on the up-and-up. In this petition, he asks that the auction be held again and the process be immediately reviewed by the court. Should the court find that the auction process “significantly and adversely affected” the seller’s ability to accept the highest bid, Straub would get his deposit back.
The court will review the proposed sale and, presumably, Straub’s petition in early January.
Source: NBC Philadelphia, “Potential Revel Buyer Wants Discount,” Dec. 25, 2014