Kerzner sets $400 million deal size for notes backing management-led LBO

By Paul A. Harris and Sara Rosenberg

St. Louis, May 25 - Kerzner International Ltd. plans to make a $400 million private placement of unsecured senior subordinated discount notes as part of the financing for its leveraged buyout by a management-led investor group, according to an SC 13E3 document filed with the Securities and Exchange Commission on Thursday.

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

As part of the financing, the company will also obtain a $2.775 billion senior secured credit facility led by Deutsche Bank Securities and Goldman Sachs Credit Partners.

As a back up for the bonds, which will be issued at the operating company level, 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 basis points, increasing by 100 basis points after six months and by 50 basis points 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 LP 2005, Colony Capital LLC, Providence Equity Partners Inc. and The Related Cos. LP.

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

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