Kerzner loses control of flag-ship resort in debt restructuring deal
Kerzner International Holdings has been forced to relinquish control of three properties as it seeks to restructure debts.
The international developer of destination resorts, casinos and luxury hotels handed control of the 2,900-room Atlantis Paradise Island, One&Only Ocean Club in the Bahamas and the 172-room One&Only Palmilla in Lost Cabos, Mexico to Brookfield Asset Management as part of a debt restructuring plan.
Kerzner has struggled with debt since the 2008 financial crisis cut hotel values and room rates.
As part of the deal, Brookfield will forgive $175 million of debt for the ownership of the Bahamas-based Atlantis and the One&Only Ocean Club.
The company will also take a half interest in the One&Only Palmilla.
Kerzner, which also reached a deal with lenders to restructure its operating debt, will continue to run Atlantis Paradise Island and the One&Only resorts.
Atlantis the Palm, Dubai - voted the Middle East’s Leading Resort at the World Travel Awards and jointly owned with Dubai World - will not be affected.
Debt problems were first revealed in August this year, with Kerzner admitting the group may be forced to sell in September.
“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 of Kerzner International.
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.
“This announcement is an important step towards that goal, allowing Kerzner to substantially reduce debt and streamline our balance sheet and operating structure,” added Kerzner.
“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,” he concluded.