ATLANTIC CITY, N.J. (AP) — A day after getting approval for a rescue plan enabling it to stay open for another year, the casino formerly known as the Atlantic City Hilton laid off about 150 workers on Thursday.
ACH casino chief operating officer Michael Frawley told The Associated Press the cuts were made across all departments, including management and rank-and-file workers. ACH had nearly 2,000 employees before the layoffs.READ MORE: Bobby Henon Resigns From Philadelphia City Council 2 Months After Bribery Conviction
“It’s not a decision we ever make lightly,” he said. “We’ve been looking at this for a long time.”
On Wednesday, the casino received approval from the state Casino Control Commission for a rescue plan that allows it to stay open for at least another year. The casino’s owner, the Los Angeles hedge fund Colony Capital LLC, is investing $15 million more into the casino. Lenders will take over Colony’s two casinos in Mississippi and wipe out ACH’s debt.
The deal also calls for an additional infusion of $9.3 million in cash for the casino when lenders release insurance proceeds from an August 2009 flooding claim.
All told, the deal will pump at least $24.3 million in new funds into the casino, which has been on life support for more than two years amid a fruitless effort to find a buyer. The casino defaulted on its loans in 2009 and was widely regarded as the Atlantic City casino in greatest danger of having to close.
At Wednesday’s casino commission meeting, Frawley said the casino planned to cut jobs, but would not tell commissioners how many were planned. He told the AP on Thursday the cuts should not impact the level of service at the casino, which he says is one of the most important factors in getting gamblers to patronize it.
“Service is value,” he said. “You can’t take value away from customers. You get into a death spiral if you do that, and we won’t.”READ MORE: Philadelphia Weather: Winter Weather Advisory Issued For Delaware Valley As Rain Transitions Into Snow
In September, the New Jersey Division of Gaming Enforcement wrote a report to the casino commission expressing concern over ACH’s financial stability. The casino posted a gross operating loss of nearly $11 million in the first six months of this year, and its monthly casino revenue continues to plunge.
In October, it took in $10.7 million, a decrease of 15.6 percent from October 2011. For the first 10 months of this year, ACH has taken in $125.5 million, down 12 percent from the same period last year, and ahead of only the Golden Nugget Atlantic City.
According to financial documents filed with the state at the end of June, ACH had owed at least $414.6 million to its lenders, including U.S. Bank National Association and J.P. Morgan Chase Bank.
Frawley said the casino plans to emphasize a new strategy of low-cost entertainment for customers.
“It doesn’t take a lot of money to have a lot of fun, and that’s what we’re going to be emphasizing for our customers,” he said.
ACH had been known as the Atlantic City Hilton until the hotel giant ended a licensing deal over the summer. The COO said the casino would announce its new name by the end of the year.
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