Kerzner to amend debt, dispose of assets via debt-for-equity exchange

By Angela McDaniels

Tacoma, Wash., Nov. 29 - Kerzner International Holdings Ltd. entered into an agreement in principle with its corporate lenders to amend its operating company debt, according to a company news release.

Kerzner International develops and operates resorts, casinos and luxury hotels. It plans to shift its business strategy from that of owner/operator to that of a management company and is pursuing the amendment as part of this change and its overall restructuring.

In addition, Kerzner International entered into an agreement in principle with the lenders to its Bahamian and Mexican assets, including a fund owned by Brookfield Asset Management. Under the agreement, Brookfield will assume ownership of these assets, and Kerzner International will continue managing the day-to-day operations.

Brookfield has agreed to exchange about $175 million of debt for the equity of the Bahamian and Mexican companies.

Kerzner International will continue to own the Atlantis and One&Only brand 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," Sol Kerzner, chairman and chief executive officer of Kerzner International, said in the release. "Today's announcement is an important step toward that goal, allowing Kerzner to substantially reduce debt and streamline our balance sheet and operating structure."

The transaction with Brookfield is expected to close by the end of the year.

Kerzner International has retained Kirkland & Ellis LLP as legal counsel, Blackstone as financial adviser and Zolfo Cooper as restructuring adviser.

Kerzner International is based in Paradise Island, the Bahamas.

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