November 29, 2011 · 0 Comments
PARADISE ISLAND, The Bahamas, Nov 29, 2011 (www.hospitalitybusinessnews.com) — –Brookfield Asset Management to Assume Kerzner’s Ownership Interests in Atlantis Paradise Island, One&Only Ocean Club and One&Only Palmilla
–Kerzner to Continue Managing and Operating the Properties
Kerzner International Holdings Limited, through its subsidiaries a leading international developer and operator of destination resorts, casinos and luxury hotels, today announced that it has shifted its forward business strategy from that of owner / operator to that of a management company under which it will continue to grow the Atlantis and One&Only Brands world-wide. Consistent with this strategy, Kerzner has entered into an agreement in principle with its corporate lenders to amend its operating company debt and has also entered into an agreement in principle with the lenders to its Bahamian and Mexican assets, including a fund owned by Brookfield Asset Management (“Brookfield”), which will see Brookfield assume ownership of these assets subject to management contracts with the Company. Brookfield has agreed to exchange approximately $175 million of debt for the equity of the Bahamian and Mexican companies.
“This transaction will permit Kerzner to move forward as a management company, allowing 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,” said Sol Kerzner, Chairman and CEO of Kerzner International. “As part of this arrangement, Kerzner will enter into a management contract with Brookfield to continue managing the day-to-day operations at Atlantis Paradise Island, One&Only Ocean Club and One&Only Palmilla. As the manager of these locations, Kerzner will remain in control of all aspects of running these businesses and the resorts will continue to operate as they always have. Kerzner and Brookfield are aligned with regard to the best interests of the business moving forward, including: keeping future capital expenditures and maintenance levels consistent with years past; maintaining current employment levels and investing the same level of resources into local and international marketing to support tourism in The Bahamas and maintain brand visibility. Kerzner currently has varying levels of ownership interest in the hotels and resorts it manages around the world, including a number of resorts in which it holds no ownership interest. Kerzner will continue to own the Atlantis and One&Only brand names and retains the right to develop additional resort properties under these names.
“For some time now, we have been actively engaged in constructive discussions with our various lender groups in order to improve our company’s capital structure, optimize the value of our assets and position Kerzner for sustainable long-term growth as a global management company,” continued Kerzner. “Today’s announcement is an important step towards that goal, allowing Kerzner to substantially reduce debt and streamline our balance sheet and operating structure. We would like to thank our employees for their ongoing dedication, and our guests, suppliers and business partners for their support. We look forward to continuing our mission as one of the world’s finest luxury hospitality management companies and we remain committed to blowing our customers away each and every time they stay with us.”
Brookfield is a global asset manager with approximately $150 billion in assets and has an over 100-year history of owning and operating assets with a focus on real estate, infrastructure, power and private equity. With decades of operating experience and over $69 billion of property assets they have developed an expertise in real estate investments that spans the globe.
The transaction is conditioned upon the negotiation of definitive documentation and other customary requirements, including Bahamian governmental approvals and consents, and is expected to close by year-end.
In connection with Kerzner’s focus on developing its management company platform and strengthening its balance sheet, Kerzner has also entered into an agreement in principle with its corporate lenders to amend the operating company’s debt, which is subject to documentation and other closing conditions related to the Company’s overall restructuring. It is expected that all of these transactions will close simultaneously.
Kerzner International has retained Kirkland & Ellis LLP as legal counsel, Blackstone as financial advisor and Zolfo Cooper as restructuring advisor.
Kerzner International Holdings Limited, through its subsidiaries, is a leading international developer and operator of destination resorts, casinos and luxury hotels. Kerzner’s flagship brand is Atlantis, which includes Atlantis, Paradise Island, a 2,317 room ocean-themed destination resort in The Bahamas, as well as The Cove Atlantis and The Reef Atlantis in The Bahamas and Atlantis, The Palm, Dubai, a 1,500-room, water-themed resort on The Palm, overlooking the Arabian sea and mainland Dubai. Under the One&Only brand, Kerzner also manages seven of the top-rated luxury resort properties in the world, located in The Bahamas, Mexico, Mauritius, the Maldives, South Africa and Dubai. Additionally, the Mazagan Beach Resort, a 500-room destination casino resort in Morocco, is also operated by Kerzner.