NASSAU, Bahamas — Global resort company Kerzner International said Tuesday that it would transfer ownership of one of the Caribbean's largest and best-known destinations to a Canadian property company to help ease its debt burden.
Kerzner said it had reached an agreement with Brookfield Asset Management, Inc. to assume ownership of Atlantis on Paradise Island in the Bahamas and other assets in exchange for taking over $175 million in debt.
Brookfield would also take over ownership of the One & Only Ocean Club on Paradise Island and the company's stake in the One & Only Resort in Los Cabos, Mexico.
Under the debt-for-equity deal, Kerzner International Holdings Limited would continue to manage Atlantis, a huge complex with about 4,000 hotel rooms, a water park, nightclubs and the Caribbean's largest casino. It was built in the 1990s on land the company acquired from the late entertainer Merv Griffin.
The resort, the largest employer in the Bahamas with more than 7,000 workers, has had to reduce room prices during the recession, straining its ability to pay its creditors. The company had been trying to restructure the resort's $2.6 billion in mortgage debt in recent months.
Sol Kerzner, the chairman and CEO of Kerzner International, said the deal will help reposition the company as a global management company while substantially reducing the debt.
"Nobody could have seen what would happen in the last quarter of 2008," Kerzner said at a news conference. "The world darkened. In those circumstances, the debt issue had to be resolved."
Brookfield, based in Toronto, is a global asset manager with approximately $150 billion in assets and is one of Kerzner's creditors. The transaction is subject to approval by the Bahamian government, which is expected by the end of the year.
Kerzner did not say how long his company would continue to manage operations but noted that it marked a major change for his company, one of the world's most prominent resort operators.
"I think of the 50 years from when I started this development," he said. "It has been our greatest achievement and the most exciting I have been involved in."