China Construction Bank contributes to a $700 million USD syndicated loan for the Atlantis, The Palm Dubai Project

Project narrative

In July 2005, a syndicate of 11 banks — including the Hong Kong Branch of China Construction Bank Corporation (CCB) — signed a $700 million USD syndicated loan facility agreement with Kerzner Istithmar Limited (KIL) — a Dubai-incorporated special purpose vehicle (SPV) and joint venture between Istithmar PJSC, a Dubai-incorporated investment house indirectly wholly-owned and controlled by the Government of Dubai via Dubai World (50% equity stake) and Kerzner International Limited, a Bahamas-incorporated and headquartered international business company and hospitality developer then listed on the New York Stock Exchange (50% equity stake) — for the Atlantis, The Palm Dubai Project. This loan carried a maturity period of 12 years. In addition to the Hong Kong Branch of CCB, the following lenders contributed to the loan syndicate: Abu Dhabi Commercial Bank PJSC (ADCB), Barclays Capital, The Commercial Bank of Dubai PSC, Emirates Financial Services PSC, HSBC Bank plc, Royal Bank of Scotland plc (RBS), National Bank of Dubai PJSC (NBD), Bank of Bahrain and Kuwait B.S.C. (BBK), Scotiabank (Bahamas) Ltd, and Ahli United Bank B.S.C. ADCB, Barclays Capital, CBD, Emirates Financial Services, and HSBC Bank served as mandated lead arrangers and fully underwrote the facility. HSBC Bank served as coordinating bookrunner. Barclays Capital served as joint bookrunner. Syndication was launched in February 2005, with CCB Hong Kong Branch, RBS, NBD, BBK, Scotiabank (Bahamas), and Ahli United Bank joined during syndication. The loan was the first of its kind financing in the Middle East, unusually large for a non-power or petrochemical sector project there. The proceeds were to be used by the borrower to finance $700 million USD of the $1.2 billion USD construction and furnishing costs and expenditures related to the opening of the Atlantis, The Palm Dubai Project, which sought to construct a major destination resort located on approximately 103 acres at the apex of the Crescent on The Palm, Jumeirah, the leisure and residential island in Dubai, including a 1,200-room five-star hotel and a 800-room four-star hotel, banquet and conference facilities, a spa, retail and entertainment village, aquariums, a water and marine (aquatic) theme park called AQUAVENTURE covering over 60 acres. Ultimately, the project featured a 1,539 key hotel complex with luxury suites including the 150-suite Imperial Club, the Bridge Suite, and the two-room Lost Chambers Suite, conference center, 17 restaurants, bars, and lounges including some on a retail promenade called The Avenues featuring a nightclub and 23 shops, an arcade, 42-acre water park with slides, tidal waves, rapids, and other rides , and three major aquariums (4.5 hectare dolphin education and conservation center Dolphin Bay; The Lost Chambers, and The Ambassador Lagoon) home to more than 65,000 marine animals. The project also was funded by $500 million USD in equity, subscribed by the sponsors and third-party investors. This was the first major destination resort of its kind in the region and was intended to be the premier destination resort and entertainment centre in Dubai, crucial to the Government of Dubai's goal of increasing tourism and achieving its goal of 15 million overnight visitors by 2010 (Vision 2010). Laing O'Rourke was contracted for the design and construction phases. EllisDon served as part of the project and construction management from design and tendering through to commissioning and handover. NORR served as part of the project and construction management via its software. Waterbury Bathroom Accessories Ltd. was contracted for the project. Site work began in late 2004. Construction, in July 2005, was scheduled begin later in 2005 and completion was expected by mid-2008. Construction began in 2005. On September 2, 2008, a fire broke out in the lobby of the Atlantis Hotel; 270 people were evacuated, but there were no casualties. Initial investigations suggested the fire started as welders were working in the area. The external roof and lobby dome suffered limited damage, and the Bridge Suite suffered smoke damage. There was discussions about delaying the opening, then scheduled for September 24, 2008. The resort owned as planned on September 24, 2008. The launch party had a fireworks programme worth $3 million USD entered into Guinness Book of World Records for largest firework display. Istithmar owned a 12.3% stake in Kerzner International; in March 2006, Istithmar agreed to acquire the entirety of Kerzner International. In April 2012, Istithmar acquired Kerzner International's 50% stake in KIL.