Kerzner 'aims to sell 50% stake in Atlantis Dubai

Premier resorts and luxury hotels operator Kerzner International is looking to sell its 50 per cent stake in Dubai's Atlantis resort. The company needs to raise money to restructure $2.6 billion (Dh9.5 billion) in mortgage debt due to mature on September 9, according to a report in the Wall Street Journal, quoting sources familiar with the matter. When asked to comment, a Kerzner International spokesperson told Gulf News in an emailed statement: "It is company policy not to comment on rumours or market speculation." The WSJ report also said the Bahamas-based company is in talks to sell the stake in the Dubai Atlantis to Istithmar World, the Dubai-based investment company which already owns the other half of the Dubai resort as Kerzner's partner and largest shareholder. Discussions Article continues below The company, however, did not divulge any details. "We remain in active and constructive discussions with our lenders," the Kerzner spokesperson told Gulf News in the statement. However, quoting sources with knowledge of the potential deal, the WSJ report revealed that the sale, if completed, could reap as much as $250 million to $350 million. It added that the sale proceeds would go towards paying down a portion of the mortgage debt on the company's flagship Atlantis resort in the Bahamas as Kerzner incurred most of the debt tied to the Atlantis resort in the Bahamas in a 2006 leveraged buyout. "Kerzner needs to make a large payment on the $2.6 billion mortgage on the Bahamian Atlantis to entice lenders to grant it a two-year extension," the report stated. Further highlighting Istithmar's position, the WSJ report said that Dubai's investment arm, which owns a 31 per cent stake in Kerzner, might find it ‘challenging' to raise the capital needed to buy the other 50 per cent stake in the Dubai Atlantis. Restructuring "Istithmar just completed a restructuring of its own debts. The Dubai Atlantis is saddled with a $1 billion mortgage of its own, meaning that any buyer of a 50 per cent stake must assume half of that mortgage. Any proceeds exceeding the mortgage amount aren't likely to be enough for Kerzner to make all of the payments required by its lenders to extend the mortgage on the Bahamian Atlantis," the report stated. Kerzner was taken private in 2006 for $3.6 billion by a group led by its founder Sol Kerzner. The company, which also runs seven One & Only resorts, has been struggling with debt since the global economic crisis in 2008, which cast a dry spell for the hotel industry worldwide. Kerzner International teamed up with Istithmar to open the 1,539-room Atlantis The Palm in 2008 on the Palm Jumeirah. The two companies had entered into a partnership in 2005 to launch the project valued at $1.2 billion.