The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Atlantis’s top executive is “very confident” that the Paradise Island resort will successfully refinance up to $2.2 billion in outstanding debt before the September 2014 deadline,

George Markantonis, Brookfield Hospitality’s president and managing director, told Tribune Business the outstanding issue was more ‘who’ would provide the funds rather than ‘if’’ they would be forthcoming.

Disclosing that the One & Only Ocean Club was also included in the refinancing, Mr Markantonis said it was possible the resorts’ owner, Toronto-based Brookfield Asset Management, may invest more money to reduce the debt burden’s size.

Pointing out that Brookfield was itself a $150 billion company with assets spread throughout the world, Mr Markantonis told Tribune Business: “The owners may put more money in themselves.”

He added that the scale of the refinancing required by the two Paradise Island resorts, and associated landholdings, was “somewhere between $1.8 to $2.2 billion”.

Increased investment by Brookfield would be a signal of its confidence in both Atlantis and the One & Only Ocean Club, and their future performance. It would also indicate that Brookfield envisions owning the properties for the long-term, and is not seeking to ‘flip’ them to another buyer.

Upon completion of last Spring’s debt-for-equity swap that saw Brookfield assume control of the two Paradise Island resorts, some $2.3 billion worth of syndicated debt was still secured upon them.

The figures mentioned by Mr Markantonis indicate that Brookfield may be contemplating paying this down by anywhere from $100 million to $500 million, although that cannot be certain.

Meanwhile, Mr Markantonis confirmed he had spent much of the past week on a roadshow meeting with current and potential Atlantis lenders.

“We’re in the middle right now of getting ourselves refinanced,” he told Tribune Business. “It’s going very well, excellent. Our owners are feeling very confident. We’re getting it. It’s just a matter of working through the process. There’s a lot of lenders to meet out there.

“I’m quietly confident we’re going to get refinanced. There’s no doubt. It’s who’s willing to do the refinancing.”

Mr Markantonis’s remarks indicate that Brookfield has decided to get an early start on the refinancing, and is leaving nothing to chance.

The terms of last year’s debt-for-equity swap extended the original syndicated loan’s maturity to September 2014, meaning that Brookfield has to repay all existing lender principal in a year’s time. It will thus have to repay them with funds from a new facility, whose structure has yet to be determined.

Brookfield assumed ownership of Atlantis and the One & Only Ocean Club as part of the debt-for-equity swap solution to Kerzner International’s debt impasse.

Kerzner was unable to repay the principal on the original syndicated loan, secured on its Bahamian assets, when it became due in 2011 as a result of the global financial crisis and subsequent recession.

The multi-billion dollar loan had been taken out to help finance Paradise Island’s Phase III expansion, plus Kerzner International’s move into Dubai and elsewhere around the world.

Brookfield, which was the most junior lender in the syndicate, agreed to swap the $175 million worth of debt it was owed by Kerzner International in return for taking over ownership of Atlantis and the One & Only Ocean Club.

As a result, it has taken over the obligation previously held by Kerzner International to repay all the other lenders in the syndicate when the restructured loan becomes due for repayment in September 2014.

The debt-for-equity swap’s completion took several months, and at least one lawsuit in the Delaware courts, to complete. Rival lenders, jockeying for position and seeking to maximise their returns in any restructuring, resorted to legal action to achieve their objectives.

Brookfield, which had managed to obtain the support of the syndicate’s major lenders for its plans, was forced to either payout/take out unhappy minor lenders or offer them more favourable terms to ensure the solution was acceptable to all.