A bid by Kerzner International Holdings Ltd, Paradise Island, Bahamas, to sell its flagship property Atlantis Paradise Island as well as two other resorts as part of a US$175 million debt restructuring deal has fallen through.
Under the deal Brookfield Asset Management, Toronto, was to assume ownership of Atlantis Paradise Island and One & Only Ocean Club, both located in the Bahamas and a 50% stake in One & Only Palmilla located in San José del Cabo, Mexico in exchange for US$175 million in debt.
However, Brookfield canceled the deal after creditors Trilogy Portfolio Co., Canyon Value Realization Fund, Canyon Value Realization Master Fund and Canyon Balanced Master Fund obtained restraining orders on the deal on Friday. The hedge funds had sued in state court in Delaware to prevent the deal from going through, and had seniority over Brookfield as lenders to Kerzner.
Kerzner had said the deal would further transition the troubled company from an owner and operator business model to third party management. Kerzner has struggled with cash flow issues as a result of the global economic downturn’s effect on tourism. Kerzner became a private company in 2006 following a US$3.8 billion buyout by the Kerzner family and private equity groups.
