Kerzner and son offer $76 per
KZL share in buyout try

Mar 21, 2006 4:08 AM

If Sol and Butch Kerzner wanted to get a quick read on the value of their company, publicly traded Kerzner International Ltd. (KZL), they got their answer Monday after offering to take the company private.

The offering price was $3 billion, plus $600 million in debt, or roughly $76 per share, a premium of 8%.

Not enough replied investors who immediately pushed the share price to more than $80.

Kerzner International, whose flagship is the Atlantis Resort, a 2,317-room, ocean-themed destination resort on Paradise Island in the Bahamas, has been dubbed by some as one of the favorites to win a casino/resort development license in Singapore.

The buyout offer permits the company to spend the next 45 days seeking a "superior" alternative offer. Should one develop, the Kerzners and their partners would be paid a $30 million break-up fee.

The Kerzners, father and son who now serve as chairman and president/CEO of the company, respectively, are being joined as partners in the buyout by the Dubai-based Istithmar PJSC; Whitehall Street Real Estate Funds, identified as Goldman Sachs & Co.’s primary real estate investment vehicle; Colony Capital LLC, a major investor in Las Vegas and the country’s largest privately-held gaming company; Providence Equity Partners, Inc., and The Related Companies, L.P.

If the buyout is accepted, Sol Kerzner will remain as chairman and Butch Kerzner will retain his position as well. Their combined equity in the company will double from its current 25% position.

At closing, KZL shares traded at $79.43.

Revised lease

Harrah’s Entertainment Inc. (HET) will provide some needed funds to the City of New Orleans with a new multi-year lease agreement for the Harrah’s New Orleans Casino.

The deal calls for the company to make a one-time payment of $3.5 million for letting the casino close a block of Fulton Street that sits on city-owned site. Annually, the company will pay the city $925,000 with $500,000 of that amount subject to cost-of-living adjustments every three years.

The new payments will be in addition to the $12.5 million a year Harrah’s pays the city in basic rent, plus millions more in sales and property tax revenue.

THE INSIDER: Multimedia Games Inc. (MGAM) has received contract with the Mexican firm Apuestas Internacionales S.A. de C.V. to provide electronic bingo units and consulting services.

Three Mississippi Gulf Coast casinos continued to flourish without competition during February, averaging $2.1 million a day in gross gambling revenue. January’s take was $2.07 million a day.

Dover Downs Gaming & Entertainment Corp. (DDE) plans to add 268 rooms to its adjoining hotel by next summer, bring the total number of rooms to 500. The expansion is part of a $52 million project.

Colorado is on the verge of outlawing smoking in bars and restaurants, as well as most public places with the exception of casinos.

The Seminole Tribe of Florida, operators of five casinos, have settled a dispute with its former chairman, James Billie, by agreeing to pay him $600,000.

Las Vegas Sands Corp. (LVS) has completed an agreement with its underwriters, led by Goldman Sachs & Co., for the sale of 55 million shares of company stock at a price of $49,1445 that is the offering price less the underwriters’ discount. Also, the underwriters have an option to acquire an additional 8,250,000 shares to cover over-allotments.

Boyd Gaming Corporation (BYD) has launched a website for the company’s proposed gaming project in Limerick Township, Pa.