S&P puts Kerzner on negative watch

Standard & Poor's said it placed Kerzner International Ltd.'s BB- corporate credit rating and B subordinated debt rating on CreditWatch with negative implications, reflecting the potential for a substantial increase in the company's debt levels following the signing of a definitive agreement for the company to be acquired by a private investor group led by the company's chairman, Sol Kerzner, and its chief executive officer, Butch Kerzner.

Under the terms of the proposed offer, holders of the company's outstanding shares will receive $76 per share in cash. The aggregate transaction value, including the assumption of $599 million in net debt outstanding as of Dec. 31, is about $3.6 billion.

Closing of the transaction is subject to, among other things, the execution of a definitive transaction, receiving the required regulatory approvals, including a shareholder vote and the receipt of financing. However, a special committee of the company's board of director's will actively solicit superior proposals during the next 45 days, the agency noted.

Depending on the pro forma capital structure of Kerzner, ratings could be lowered, but not likely by more than two notches, S&P said.

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