Atlantis Resort rescue moves forward
Bahamas resort deal approved to give Brookfield Asset Management ownership.
NASSAU, Bahamas, Thursday, May 3, 2012 – Brookfield Asset Management must maintain at least 8,000 employees and pump a minimum US$50 million a year into the world famous Atlantis Resort and One & Only Ocean Club in exchange for the Bahamas government approving its ownership transfer.
The government of The Bahamas has announced its approval of the ownership transfer of Kerzner International’s Atlantis Resort and the One & Only Ocean Club on Paradise Island to Brookfield Asset Management in a US$175 million debt-for-equity swap.
The announcement comes almost four months after Brookfield cancelled its original deal to take over the Paradise Island properties and another resort in Mexico.
The government and Kerzner executives first announced the impending ownership transfer in November 2011. However, in mid-January, Brookfield cancelled its offer days after a group of Kerzner creditors more senior to Brookfield filed a lawsuit alleging that the Canadian conglomerate negotiated a “sweetheart deal” that would negatively impact the interests of other lenders.
On Friday (April 27), the government said it was now “formally satisfied” that Kerzner’s group of lenders had agreed to the transfer of ownership.
Along with the financial requirements as a condition of the ownership transfer, the government has also stipulated that Kerzner continues to market the Atlantis brand on the same level as it was previously. The new deal also mandates that existing staff will be employed by Brookfield.
Under two management agreements included in the deal -- the Atlantis Management Agreement and Ocean Club Management Agreement -- Kerzner will continue to manage Atlantis for a minimum of three to six years and the One & Only Ocean Club for at least 15 years, once it meets “certain performance hurdles”.
However, despite these stipulations, the Bahamian government has not outlined what, if any, repercussions Brookfield would face if it does not adhere to these conditions.
"I expect there will be some repercussions if the conditions aren't met, but precisely what they are I don't recall at the moment...," said Tourism Minister Vincent Vanderpool-Wallace at a press conference following the government’s announcement.
George Markantonis, Kerzner International (Bahamas) managing director, said the new deal would not change the company's day-to-day operations. He added that Atlantis would likely benefit from the new arrangement.