Kerzner International refinances $145m debt

Kerzner International Hotels, the operator and erstwhile developer of luxury hotel brands including Atlantis and the One&Only, has refinanced US$145 million (Dh532.6m) of debts.

The South African hotel chain founded by the business magnate Sol Kerzner said that it had appointed Deutsche Bank to arrange and underwrite the facility, which was then syndicated to banks including Abu Dhabi Commercial Bank, Ahli United Bank, Emirates NBD and Doha Bank.

The move was the latest step in the indebted hotel chain's strategy to deleverage its balance sheet, which has involved the company divesting itself of the bulk of its prestigious hotel properties and concentrating on the acquisition of management contracts.

Kerzner said yesterday that the restructuring would "significantly reduce interest costs to the company, extending its debt maturity profile to five years and allowing it to reinvest in growth projects".

Kerzner has been attempting to reduce its debt since Sol Kerzner and a consortium of investors including Istithmar, Goldman Sachs's Whitehall Funds and Colony Capital raised $3.2 billion in 2006 to take the company private.

In December 2011, after hiring Blackstone Group to advise it on refinancing, the company handed over ownership of its flagship Atlantis resort in the Bahamas as well as the One&Only Ocean Club and the One&Only Palmilla in Mexico to the Canadian investor Brookfield Asset Management.

Last year Kerzner sold its 50 per cent stake in its 1,500 room Dubai flagship hotel Atlantis the Palm to co-owner Istithmar World for $250m.

Also last year the group was reported to have scrapped plans to develop a hotel resort on The World islands in Dubai alongside the property developer Nakheel.

The sales are thought to have come as a bitter blow to Mr Kerzner, who founded the company in 1962 with the purchase of the Astra Hotel in Durban and went on to build up a hotel empire which included the Sun City leisure and gambling resort.

Currently the hotel group owns just one of the properties in its portfolio outright - the One&Only Le Saint Geran in Mauritius. It also owns stakes in the One&Only Cape Town and the Mazagan Beach Resort in Morocco.

But with the global hospitality beginning to recover from the financial crisis, Kerzner is starting to benefit from a selective increase in room rates. According to Hogg Robinson Group's most recent annual report, hotel rates increased in 32 cities globally last year compared with 23 the previous year. In Dubai rates rose on average from Dh563 in 2011 to Dh588 last year.

"With substantially less debt and with access to additional cash, we can continue to focus on our growth plans to develop new experiences around the world," said Alan Leibman, the chief executive of Kerzner International. "Our ability to tap into global and regional liquidity is a testament of the financial market's confidence in Kerzner, its management team and the future prospects of the business."

Kerzner has recently announced that it will operate two new resorts, One&Only Montenegro, the company's first resort in Europe and One&Only Sanya in China, its first resort in Asia.

Published: March 27, 2013 04:00 AM


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