Kerzner outlines details on $2.775 billion facility for LBO financing

By Sara Rosenberg

New York, May 25 - Kerzner International Ltd. released details on the planned financing package for its leveraged buyout by an investor group that's led by management, noting that it will include a $2.775 billion senior secured credit facility, according to an SC 13E3 filed with the Securities and Exchange Commission Thursday.

Deutsche Bank and Goldman Sachs Credit Partners are joint lead arrangers and joint bookrunners on the credit facility, with Deutsche acting as administrative agent.

The credit facility consists of a $2.075 billion seven-year term loan B and a $700 million six-year revolver, with both tranches expected to carry an interest rate of Libor plus 250 basis points.

The revolver will have a 50 bps commitment fee.

There will be no amortization on the term loan B before 2009. Thereafter, equal quarterly amortization shall be payable in quarterly installments equal to 2.5% per annum of the aggregate principal amount of the term loan during 2009 and 2010, and 1% per annum of the aggregate principal amount of the term loan for each following year, the filing said.

Revolver borrowings will be available for working capital, capital expenditures and general corporate purposes.

The financing package will also include $400 million of unsecured senior subordinated discount notes that will be issued at the operating company level in a private placement.

As a backup for the bonds, the company has obtained a commitment for a $400 million senior subordinated bridge loan from Deutsche Bank and Goldman Sachs.

The bridge loan will carry an initial interest rate of Libor plus 500 bps, increasing by 100 bps after six months and by 50 bps every three months thereafter.

Kerzner is being acquired by its chairman, Sol Kerzner, and its chief executive officer, Butch Kerzner. The investor group also includes Istithmar PJSC, Whitehall Street Global Real Estate Limited Partnership 2005, Colony Capital LLC, Providence Equity Partners Inc. and The Related Cos. LP.

Under the purchase agreement, the group will pay $81.00 in cash per outstanding ordinary share. The aggregate transaction value is about $4 billion.

As part of the LBO, Kerzner will tender for its 6¾% senior subordinated notes due 2015 and its convertible notes.

The transaction is expected to close in mid-2006 and is subject to customary terms and conditions, including the receipt of financing, regulatory approvals and shareholder approval.

Kerzner is a Paradise Island, The Bahamas, developer and operator of destination resorts, luxury resort hotels and gaming properties.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.