Abu Dhabi: Istithmar World, a subsidiary of Dubai World, yesterday announced that it had bought out Kerzner International Holdings Limited’s 50 per cent stake in Atlantis, The Palm for $250 million (Dh918 million), becoming the sole owner.
Atlantis, Dubai’s mega resort flagship, has 1,537 rooms, a waterpark and 18 restaurants. Istithmar World and Kerzner jointly developed the resort which opened in 2008. Kerzner will continue to be the operator of Atlantis, The Palm, a statement said yesterday.
“The performance of the Atlantis continues to exceed our expectations. This deal, allowing us to become the sole owner of Atlantis, The Palm Dubai, effectively consolidates our investment in one of our best performing assets,” said Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of Dubai World, in a statement.
Shaikh Ahmad added: “This acquisition is in line with our strategy of managing our assets for value and investing selectively where growth opportunities exist.”
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Istithmar was advised on the transaction by Moelis & Company, which acted as financial adviser, and New York law firm Wachtell, Lipton, Rosen & Katz.
The restructuring shrinks Kerzner to a resort management, development and branding company that will continue to run the seven One & Only resorts and Atlantis properties, known for Mayan-themed water slides and up-close encounters with dolphins and sharks.
Kerzner has struggled with debt since a $3.6 billion leveraged buyout in 2006 led by founder Sol Kerzner took it private for $3.6 billion. Owners include Istithmar, Goldman Sachs Group Inc.’s Whitehall Funds and Colony Capital LLC.
The revised agreement with Brookfield includes modifications for the dissenting creditors but still puts Brookfield in control of Atlantis. Brookfield, in turn, has converted its $175 million slice of Kerzner’s debt into equity. Holders of the resort’s remaining $2.3 billion of debt have agreed to push the due date to September 2014
. Brookfield intends to refinance the debt by then.
— With inputs from agencies
Why Kerzner had to sell
The catalyst for the restructuring came more than a year ago, when Kerzner executives realised that they couldn’t refinance $2.5 billion (Dh9.18 billion) of debt tied to the Atlantis in the Bahamas that was approaching maturity. By the time the debt came due last September, Kerzner was in talks to forfeit the resort to its junior-most creditor, Brookfield Asset Management of Toronto, Canada. But other creditors subsequently sued for better terms, causing Brookfield to revise the deal.
By Himendra Mohan Kumar, Staff Reporter