The Tribune

By CELESTE NIXON Tribune Staff Reporter cnixon@tribunemedia.net IT is unclear what the future holds for the Atlantis resort and One&Only Ocean Club after the ownership transfer agreement with Brookfield Asset Management was cancelled yesterday. The shock announcement, which leaves the mega-resort's fate in "limbo," according to the Wall Street Journal, came after a Delaware court granted a restraining order delaying the deal. The Tribune understands that the agreement was of the utmost importance, as creditors were reluctant to refinance the company's $2.3 billion loan because of fears that Atlantis and Baha Mar could not co-exist. However, the argument appears to be among the creditors -- not Atlantis -- with creditors jockeying for position, having accused Brookfield of jumping the queue by converting its debt into equity. Brookfield's loan was at the end of the line for repayment. By entering into a deal with Atlantis, it pushed the other creditors behind it, leaving some of them in fear of not being compensated. Atlantis workers were told their jobs would not be affected by the ownership transfer, but as word of the deal's collapse spread yesterday, the opposition PLP sought to raise the spectre of lay-offs and put the blame on the government. Even after yesterday's shock announcement George Markantonis, president and marketing director of Kerzner International, reiterated an earlier statement that "no one is going to lose their jobs because of this transaction." "Forty-eight days after the Progressive Liberal Party expressed serious concerns about the FNM government's approval of the Atlantis deal, that deal has fallen apart, leaving more than 7,000 Bahamians even more anxious about the security of their jobs," said party leader Perry Christie in a statement. "The Prime Minister and the FNM government have shown extraordinary incompetence when it comes to dealing with our nation's largest private employer. Working in secret behind closed doors, they approved a takeover by a junior creditor without first securing support from more senior creditors, who went on to pull the deal under, leaving the future of Atlantis uncertain. Despite repeated calls from the PLP, the FNM has never shared the details of that agreement with the Bahamian public," Mr Christie said. However, Atlantis executives said the cancellation of the deal will in no way affect local employment numbers, and that local political issues had no bearing on events in the Delaware court or among the creditors. (See Tribune Business for full story). The debt for equity deal was halted by a Delaware court to allow for an injunction hearing prior to the closing of the deal. According to international reports, following the announcement of Brookfield's deal with Kerzner to take over ownership of the resort, creditors, including Trilogy Portfolio Company, Canyon Value Realization Fund, the Canyon Value Realization Master Fund and Canyon Balanced Master Fund sued that the terms of their loan agreement with Kerzner was being violated by Brookfield. Delaware Judge Donald Parsons issued the temporary restraining order on Friday, to hear arguments for a preliminary injunction scheduled for January 27. Brookfield, however, chose to cancel the deal rather than proceed with the preliminary injunction hearing. The PLP said: "This is not a game. Bahamians must have an effective representative at the bargaining table. The PLP is willing to assist the FNM going forward. The Bahamas must now reach out to all creditors, assist in new negotiations, and work with all stakeholders to preserve the operations of the resort, protect Bahamian employment, and avoid foreclosure or insolvency." Prime Minister Hubert Ingraham announced the $175 million debt-for-equity swap, which announced that Brookfield would take over ownership of Atlantis and the One&Only Ocean Club from Kerzner International in late November. During his announcement Mr Ingraham insisted the new owners had no plans to make staff cuts and would continue to invest in the resort, the second largest employer in the country, at the same rate as before the sale. As the employer of nearly 8,000 Bahamians, Kerzner International is the single largest private sector employer in the Bahamas, the deal and its possible impact on workers has recently come under fire by both the Progressive Liberal Party and the Democratic National Alliance who called for the terms of the agreement to be made public by government. Atlantis vice president of public affairs Ed Fields and Minister of State for Finance Zhivargo Laing both declined to comment on the matter.