Kerzner International Holdings Ltd., the company that has propped up Bahamas tourism for over a decade, handed ownership of the Atlantis resorts in the Bahamas and Dubai to Brookfield Asset Management as part of a debt restructuring.
The deal sees Brookfield forgiving $175 million of junior debt for ownership of the Bahamas-based Atlantis Resort and the Bahamas One&Only Ocean Club, as well as a half interest in the One&Only Palmilla in Mexico.
Kerzner will continue to run Atlantis Resort Paradise Island and the One&Only resorts as a management company. Atlantis the Palm, in Dubai, jointly owned with Dubai World, isn’t affected.
Atlatnis Resort, with its Mayan-themed water slides, dolphin encounters and huge outdoor aquarium, is the Bahamas’ largest private employer and a major tourist draw.
Kerzner International has struggled with debt since the 2008 financial crisis cut hotel values and room rates, shortly after Sol Kerzner took the company private in 2006 in a $3.6 billion deal.
The properties being taken over by Brookfield had about $2.6 billion in debt when negotiations began a year ago. That shrinks to about $2.3 billion, with Brookfield’s forgiveness and an earlier $100 million payment that was part of a previous maturity extension.
“This transaction will permit Kerzner to move forward as a management company,” Chairman and Chief Executive Officer Sol Kerzner said in the statement. The deal allows “us to get back to doing what we do best – designing and managing world-class destination and luxury resorts under the Atlantis and One&Only brands,” he said.
Kerzner was advised on the restructuring by Blackstone Group LP (BX), Kirkland & Ellis LLP and Zolfo Cooper, according to a statement released by the company.
Other holders of Kerzner’s debt included Centerbridge Capital Partners LLC, TPG Capital, Abu Dhabi Commercial Bank and Fidelity Investments.
Mr Kerzner, 76, built the spectacular resort on Paradise Island property he purchased from Merv Griffin, the late talk show host and game show creator. The resort is surrounded by a massive open-air marine habitat with over 50,000 sea creatures and a luxury marina that attracts an international mega-yacht market.
In 2007, Atlantis added the Reef and the Cove hotels, a new dolphin habitat and expanded the Aquaventure water park in a $1 billion expansion.
Kerzner also opened a second Atlantis in the Persian Gulf, on the outer frond of Palm Jumeirah, Dubai’s man-made, tree-shaped island.
Kerzner also runs seven One&Only resorts, with different levels of property ownership. Today’s deal doesn’t impact the other five.
Brookfield Asset Management is a Toronto-based investment firm that manages about $150 billion and focuses on property, infrastructure, renewable power and private-equity investments.
Additional Articles:
Brookfield Takes Chase of Distressed Deals – Wall Street Journal
Brookfield takes over Atlantis Resort in Bahamas in debt-for-equity swap – Washington Post
Kerzner transfers ownership of Atlantis in Bahamas – CBS News
Kerzner International To Position Itself As A Management Company – Hotel News Resource
Kerzner transfers Atlantis resort ownership – Travel & Leisure
