Kerzner may sell Atlantis stake to Dubai’s Istithmar

Luxury resort operator in talks to sell 50% stake to raise money for mortgage debt
Kerzner built the Atlantis resorts in Dubai and the Bahamas
By Staff writer
Wed 31 Aug 2011 09:02 AM

Luxury resort operator Kerzner International Holdings may sell its 50 percent stake in the Atlantis resort in Dubai to raise money to restructure $2.6bn in mortgage debt coming due next week, the Wall Street Journal reported on Wednesday, citing sources.

The Bahamas-based company is in talks to sell the stake to Istithmar World, Dubai's investment arm, people familiar with the matter told the Journal.

The sale, if consummated, could reap as much as $250-$350m, the people said.

The proceeds would go toward paying down a portion of the mortgage debt on a separate Atlantis resort in the Bahamas, Kerzner's flagship property and one of the most popular resorts in North America, the report said.

Kerzner International has been in talks with creditors to extend maturities on its debt due next month. The company may default on the debt, due September 9, unless a deal is reached, sources told Bloomberg News earlier this month. It received a waiver on its operating company debt earlier this year, one of the people said.

The company, which also runs seven One&Only resorts, has struggled with debt since the 2008 financial crisis reduced hotel values and room rates.

The company was taken private in 2006 by its chief executive and founder, Sol Kerzner, leading a consortium of investors including Dubai's Istithmar, Colony Capital and Providence Equity Partners.

If Kerzner doesn't soon sell the Dubai Atlantis stake and get a wider restructuring deal done, creditors are likely to grant short grace periods to effectively push back by a few weeks the due date on the company's mortgage, the Journal reported.

The sale discussions remain fluid and might fall apart, the people said.

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