Kerzner International Holdings Limited announced Wednesday 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, which will see Brookfield assume ownership of these assets subject to management contracts with the company. Brookfield has agreed to exchange roughly $175 million of debt for the equity of the Bahamian and Mexican companies.
A spokesperson for Kerzner International told Travel Agent Thursday that “this transaction should be seamless to the guests, as Kerzner and its staff will remain as manager of the properties. Operations will not be affected.”
“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, in a written release. “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.”
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. Zolfo Cooper is also currently handlind the restructuring of funds for Cap Juluca in Anguilla.
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.
“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,” said Kerzner. “(Wednesday's) announcement is an important step towards that goal, allowing Kerzner to substantially reduce debt and streamline our balance sheet and operating structure."