According to Bloomberg News, Standard & Poors Ratings Service revised its outlook on Kerzner International from stable to negative Tuesday, following the announcement that the company signed an agreement to form a joint venture with Nakheel LLC to build Atlantis, The Palm in Dubai.
On Monday, Kerzner International agreed to a joint venture with Nakheel LLC, an entity owned by the government of Dubai to develop Atlantis, The Palm. The first phase of the development, estimated at $650 million will include a 1,000-room resort and an extensive water theme park.
The company also recently purchased Club Med, Paradise Island for approximately $40 million and broke ground on the first phase of a $600 million expansion to Atlantis Paradise Island earlier this month.
Kerzner International has also announced participation in the development in another project in London.
This project, which would consist of a casino and a hotel, is subject to the enactment of appropriate gaming legislation by the United Kingdom.
If the project goes forward, Kerzner’s investment in the project is estimated at $350 million.
According to Bloomberg News, a Standard & Poor’s analyst revealed that: “Although all of these investments will be made over time, collectively, they utilize a significant portion of Kerzner’s debt capacity within the current rating.”
One local analyst agreed with Standard & Poor’s; he observed that Kerzner may be taking on more debt, which would not allow the company the flexibility it would need if there is a sudden downturn in business.
“I think the bigger question is that they may not go ahead with Phase III because of their inability to get the necessary funding for all these projects,” he said.
He went on to speculate that this could be the reason why so much pressure is being placed on the Government to improve the airport.
“They may be buying time as they focus on other destinations where they don’t have presence,” the analyst said.
By Martella Matthews, The Nassau Guardian
