6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 or
15d-16 under the securities exchange act of 1934

For the month of May 2003

KERZNER INTERNATIONAL LIMITED
(Translation of registrant's name into English)

Coral Towers, Paradise Island, The Bahamas
(address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.

Form 20-F        X                                Form 40-F           

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes                                          No      X     

If “yes” is marked, indicate below this file number assigned to the registrant in connection with Rule 12g-3-2(b):

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Exhibit Index is on Page 3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:	May 27, 2003	KERZNER INTERNATIONAL LIMITED
		By:	/s/John R. Allison
		Name:	John R. Allison
		Title:	Executive Vice President
			Chief Financial Officer

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EXHIBIT LIST             

Exhibit	Description
99(1)	Press Release on May 27, 2003 Kerzner Signs New Heads of Agreement With the Bahamas for $600 Million Expansion On Paradise Island Phase III of Atlantis Would Leverage Investment in Infrastructure From Phase II Expansion Completed in 1998 Expansion Would Increase Room Count to Over 3,500 Rooms On Paradise Island and Significantly Add to Existing Water-themed Attractions
99(2)	Heads of Agreement dated as of May 26, 2003 between The Government of the Commonwealth of The Bahamas and Kerzner International Limited

Page 3 of  3

EX-99

Exhibit 99(1)

FROM:	Kerzner International Limited
	The Bahamas
	Contact: John Allison
	Tel: +1.242.363.6016

FOR IMMEDIATE RELEASE

KERZNER SIGNS NEW HEADS OF AGREEMENT WITH THE BAHAMAS
FOR $600 MILLION EXPANSION ON PARADISE ISLAND

PHASE III OF ATLANTIS WOULD LEVERAGE INVESTMENT IN INFRASTRUCTURE FROM
PHASE II EXPANSION COMPLETED IN 1998

EXPANSION WOULD INCREASE ROOM COUNT TO OVER 3,500 ROOMS ON PARADISE
ISLAND AND SIGNIFICANTLY ADD TO EXISTING WATER-THEMED ATTRACTIONS

PARADISE ISLAND, The Bahamas, May 27, 2003 – Kerzner International Limited (NYSE: KZL) (the “Company”) today announced that it has reached a new Heads of Agreement with the Government of The Bahamas (“Government”) with respect to a $600 million expansion to its flagship resort, Atlantis, Paradise Island, that would increase the Company’s total investment to $1.7 billion.

The expansion would include the following components:

o 1,200 new rooms to be situated at Pirate’s Cove that is adjacent to one of the best available beach sites in the Caribbean;

o A significant expansion to Atlantis’ existing water-themed attractions including, subject to environmental approvals, a new dolphin encounter attraction that is ideally suited for the world’s largest man-made marine habitat;

o Four new restaurants and over 20,000 square feet of retail space around the Atlantis Marina (“Marina Village”) that will be a must-see destination for all tourists to The Bahamas;

o The addition of three new luxurious villas (“Ocean Club Villas”) to the One&Only Ocean Club, that will enhance its award winning reputation as one of the best luxury resort hotels in the world;

o An expansion that will add approximately 120 two-bedroom suites to Harborside at Atlantis (“Harborside”), a timeshare project that lies adjacent to Atlantis;

o At least 50,000 square feet of new convention and meeting space that is expected to benefit from agreements that are anticipated to be negotiated between The Bahamas and the United States that will permit companies in the United States to obtain a federal tax deduction from expenses incurred in connection with conventions in The Bahamas;

o The right to develop, upon environmental approval, a new 18-hole golf course on Athol Island, which lies just east of Paradise Island, in partnership with Government;

This investment will take place in two phases. The first phase of approximately $100 million will commence in the second half of 2003, with all elements of such phase expected to be completed by the end of 2005. Construction on the second phase, that will include the 1,200-room hotel and expansion of the water-themed attractions, is expected to commence by the end of 2004, with completion by Christmas 2006.

“We are very excited about this next stage of Atlantis’s development and growth,” said Sol Kerzner, Chairman and Chief Executive Officer of Kerzner International. “This is an ambitious project and we are convinced that to remain successful we must continue to add new and exciting attractions. We believe that success is built upon keeping our product at the leading edge of the resort industry, delivering world-class service and continuing to promote the resort with an aggressive and innovative marketing plan. We have also operated Atlantis successfully during some trying times. Last year, while most others in our industry were suffering, we were able to maintain our room rates and occupancies.”

Butch Kerzner, President of Kerzner International commented, “Atlantis has shown remarkable resilience during a difficult travel market. While many other resorts and hotels have experienced a difficult period, our Paradise Island operations have gone from strength to strength. During 2002, our Paradise Island business achieved some very significant milestones that included surpassing the $500 million gross revenue threshold for the first time. Our Paradise Island operations achieved record EBITDA in 2002, posting increases of 11% and 20% ahead of levels achieved during 2000 and 2001, respectively. The robustness of the business lies in the uniqueness of our product offering, strength of the Atlantis brand, and diversity of revenue streams. This new phase of expansion will leverage off all our work and investment over the last ten years and will add outstanding new attractions, keeping the destination new and exciting.”

Demand patterns have been strong for Atlantis. In the first quarter of 2003, the Company managed to maintain revenue per available room (RevPAR) with the same period last year, despite a weaker travel market arising from the effects of the war in Iraq. In the first quarter of 2003, Atlantis achieved a RevPAR of $239 as compared to $240 in the same period last year. In 2002, Atlantis achieved a RevPAR of $198 as compared to $194 and $201 in 2001 and 2000, respectively.

“Booking patterns have now returned to normal levels following the end of this war,” said Butch Kerzner. “The Company currently anticipates maintaining a flat RevPAR in the second quarter of 2003. This proposed expansion will position Atlantis well when demand patterns in the travel industry improve.”

As part of the new Heads of Agreement and consistent with its commitments to the Bahamian public, Government has provided certain undertakings that include efforts to improve Nassau International Airport and the roadway systems. Further, it will operate fire and ambulance facilities on Paradise Island; and, on an as needed basis, expand the facilities at The Bahamas Electricity Corporation and The Bahamas Telecommunications Corporation. The agreement with Government also provides for various investment incentives including:

o An extension of the casino tax concessions that the Company presently enjoys, that includes extending certain concessions for a period of eleven years from the completion of the expansion;

o An extension by twenty years of the moratorium on new casino licenses on Paradise Island and New Providence from the completion of the expansion;

o Exemptions from certain import duties on construction materials;

o Continued co-operative marketing contributions.

As part of the Heads of Agreement, the Company has also provided certain undertakings that include skills training, community development programs, and to the extent possible, a local stock ownership program for Bahamians.

Construction of Marina Village and Ocean Club Villas will commence by the end of this year with an expected completion by the end of 2004. The Harborside expansion will commence by early 2004 and is expected to be completed by 2005. These projects are expected to cost approximately $100 million. The largest portion of the expansion, of approximately $500 million, covering the new 1,200-room hotel, increase in the existing water based attractions, additional convention space and new golf course is expected to commence in late 2004 and be completed by Christmas 2006. The Company currently anticipates funding this development through free cash flow and existing debt capacity.

Butch Kerzner continued, “We have a very strong balance sheet. While many in our industry are highly leveraged, we have been disciplined in using our free cash flow to repay debt. We now have the financial strength and capacity to move forward with an undertaking the size of Phase III.”

Sol Kerzner added, “This expansion project will bring our investment in The Bahamas to $1.7 billion, which reflects our continued confidence in the Government of The Bahamas and our commitment to the hard-working people of this country. I am quite pleased to announce that this project is expected to add at least 2,000 jobs for Bahamians at our properties and will bring many visitors to The Bahamas.”

The Company will hold a conference call on May 27, 2003 at 4:00 p.m., EST to discuss this announcement. This call will be available on a first-come, first-serve basis by dialing 877.371.3550 (US/Canada) and 706.679.0864 (international). A replay of the conference call will be available beginning May 27, 2003 at 7:00 p.m. EST and ending on May 30, 2003. The replay numbers are 800.642.1687 (US/Canada) and 706.645.9291 (international) using the following Pin Number: 14697.

About the Company

Kerzner International Limited is a leading developer and operator of premier casinos, resorts and luxury hotels. The Company’s flagship destination is Atlantis, a 2,317-room, ocean-themed resort located on Paradise Island, The Bahamas. Atlantis is a unique destination casino resort featuring three interconnected hotel towers built around a 7-acre lagoon and a 34-acre marine environment that includes the world’s largest open-air marine habitat. The Company also developed and receives certain income from Mohegan Sun in Uncasville, Connecticut. Following the completion of a $1 billion expansion, the Native American-themed Mohegan Sun has become one of the premier casino resort destinations in the United States. In its luxury resort hotel business, the Company operates luxury resorts primarily under the One&Only brand. The Company manages nine resort hotels in The Bahamas, Mauritius, Dubai, the Maldives and Mexico and has entered into an agreement to develop and manage a tenth property in the Maldives. For more information concerning the Company and its operating subsidiaries visit www.kerzner.com.

This press release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, which are described in the Company’s public filings with the Securities Exchange Commission.

Investor inquiries should be directed to John Allison, Executive Vice President – Chief Financial Officer of Kerzner International Limited at +1.242.363.6016.

Media inquiries should be directed to Josh Hochberg, Vistance Group LLC at 212.935.2269.

_________________

EX-99

                                                                      Exhibit 99(2)


                         COMMONWEALTH OF THE BAHAMAS
                         New Providence



                         DATED the 26th day of May, 2003





                          BETWEEN:-





                                            THE GOVERNMENT OF THE

                                         COMMONWEALTH OF THE BAHAMAS



                                                     and



                                        KERZNER INTERNATIONAL LIMITED











                                     ______________________________________

                                             HEADS OF AGREEMENT

                                     ______________________________________











COMMONWEALTH OF THE BAHAMAS


New Providence





THESE HEADS OF AGREEMENT are made the 26th day of May, 2003.





BETWEEN :


(1)      The Government of the Commonwealth of The Bahamas  represented  herein by, WENDELL MAJOR,  Secretary
of the National Economic Council, (hereinafter called "the Government") and;


(2)      KERZNER  INTERNATIONAL  LIMITED a company  incorporated  under the laws of and having its registered
office in the  Commonwealth  of The Bahamas,  to include its relevant  subsidiaries  and  affiliates at every
tier, represented herein by SOLOMON KERZNER, Chairman and Chief Executive (hereinafter called "Kerzner").


RECITALS


WHEREAS : -


A.       Kerzner,  through its  subsidiaries  or  affiliates,  jointly  with  others or on its own,  owns and
         operates  properties on Paradise Island including the Atlantis Resort,  the Ocean Club and the Ocean
         Club Golf  Course,  Harborside  at  Atlantis  and certain  undeveloped  land ("the  Paradise  Island
         Properties");


B.       The parties hereto entered into a Heads of Agreement dated 18th August,  1993, as  supplemented  and
         amended by Heads of Agreement  dated 13th December,  1995 ("the 1995 Heads of  Agreement")  and 28th
         November,  1997  (together  "the Prior Heads of  Agreement"),  in respect of the  development of the
         first two phases of Kerzner's development program on Paradise Island ("Phase I" and "Phase II");


C.       Phases I and II being  completed,  Kerzner  is about to  commence  the  third  phase of  development
         ("Phase III") as more particularly defined in paragraphs 1.1 and 1.2 hereof;


D.       The  Government has approved in principle the works and  investments  by Kerzner  comprised in Phase
         III and in  consideration  thereof has agreed to certain  incentives and concessions  upon the terms
         and conditions hereinafter contained.





NOW THESE HEADS OF AGREEMENT WITNESSETH in consideration of the premises as follows:-


1.       OBLIGATIONS OF KERZNER


1.1      Subject  to the  matters  contained  or  referred  to in  paragraph  11 hereof,  and  subject to the
         Government  complying with its  obligations  hereunder,  Kerzner hereby agrees to spend a minimum of
         US$600  million  directly  towards  the  development  and  construction  of Phase III to include the
         following:


         1.1.2    To  construct  a new hotel  comprising  a minimum  of 1,000  rooms to be  located on a site
                  comprising the former  Pirates' Cove and Paradise  Paradise hotel sites and expand existing
                  convention facilities by at least 50,000 square feet ("the New Hotel and Facilities");

         1.1.3    To construct 3 luxury villas at the Ocean Club ("the Ocean Club Villas");

         1.1.4    To construct  approximately  20,000  square feet of restaurant  and retail  facilities on a
                  7-acre site  adjacent to the  Atlantis  Marina,  including  new resort  restaurant  and bar
                  facilities to be operated by Kerzner  ("Marina  Village").  The retail  facilities shall be
                  operated by Bahamians  with the  exception of the resort logo store which shall be operated
                  by Kerzner;

         1.1.5    Expansion  of the  water-based  attractions  of  Atlantis,  including  a new  dolphin  swim
                  attraction ("the Expanded  Attractions").  Kerzner shall meet the reasonable  protocols and
                  requirements of the relevant  Government  agencies,  including the Ministry of Agriculture,
                  Fisheries and Local  Government,  the Ministry of Health and the BEST Commission,  and give
                  proper  consideration  to the concerns of the Bahamas  National  Trust,  particularly  with
                  respect to the establishment of a dolphin swim attraction;

         1.1.6    To construct and provide for the initial  equipping of a Fire and Ambulance Station on land
                  owned by Kerzner,  to be operated and maintained by the Government under a 99-year lease at
                  a peppercorn rent, pursuant to paragraph 9.5 hereof ("the Fire and Ambulance Station");

         1.1.7    To develop a golf course pursuant to paragraph 12 hereof ("the New Golf Course");

         1.1.8    To expand the existing  Potable Water  Production and Treatment Plant and any other private
                  (as  opposed  to  public  utility)  infrastructure  upgrades  or  expansions  necessary  to
                  accommodate the other aspects of Phase III ("the Utilities and Infrastructure  Expansion");
                  and

         1.1.9    To construct an expansion of  Harborside at Atlantis by the addition of  approximately  120
                  2-bedroom units on adjacent land alongside Nassau Harbour ("Harborside Phase II").

1.2      Phase III is divided  into two parts.  Phase  III-A shall  comprise  the Ocean Club  Villas,  Marina
         Village,  the Fire and Ambulance  Station and  Harborside  Phase II. Phase III-B shall comprise
         the New Hotel and Facilities,  the New Golf Course, the Expanded  Attractions and the Utilities
         and Infrastructure  Expansion.  Kerzner undertakes to commence  construction of Phase III-A and
         Phase III-B as follows:

         1.2.1    Construction  shall  commence  on aspects  of Phase  III-A by 31st  December,  2003 and the
                  balance by 30th June, 2004, with an anticipated  substantial completion date of all aspects
                  of Phase III-A by 31st December, 2005,

         1.2.2    Subject to the  matters  contained  or  referred  to in  paragraph  11 hereof,  Phase III-B
                  construction  shall commence by 31st December of 2004. It is expected that the construction
                  period for Phase III-B shall not exceed 36 months.

         1.2.3    Kerzner  may, in its  discretion,  move  aspects  from Phase  III-B to Phase III-A  without
                  prejudice to the application of the matters contained or referred to in paragraph 11 hereof
                  with respect to Kerzner's decision to proceed with the remaining aspects of Phase III-B.

1.3      For the purposes of these Heads of  Agreement,  the  following  terms shall be assigned the meanings
         below:

         1.3.1    "subsidiaries"  or  "affiliates"  shall include,  as to a party,  any  corporation or other
                  entity or person  controlled by, under common control with, or which controls,  directly or
                  indirectly,  such party, or of which such party is, directly or indirectly,  at least a 50%
                  owner.

         1.3.2    "commencement  of  construction"  when applied to either Phase III-A or Phase III-B,  shall
                  mean the date upon which the first site works are  commenced  with respect to any aspect of
                  Phase III-A or Phase III-B respectively.

         1.3.3    "substantial  completion  of Phase  III"  shall  mean the date upon which the New Hotel and
                  Facilities open for business,  or, in the event that Kerzner serves a Phase III-B Notice in
                  accordance with paragraph 11 hereof, the later of the Phase III-B Determination Date or the
                  date upon which the final aspect of Phase III that is constructed opens for business.


1.4      Kerzner agrees in the development of Phase III to abide by the following:


         1.4.1    Assuming  completion  of all  aspects  of both  Phase  III-A and Phase  III-B,  to create a
                  minimum of 2,000 additional permanent jobs for Bahamians;


         1.4.2    To utilize Bahamian materials and services,  subject to competitive terms, price, delivery,
                  efficiency and quality  consistent with a first class resort,  to international  standards.
                  Also,  accepting  that the scale and complexity of the proposed  construction  will require
                  the involvement of major  international  construction  companies and  sub-contractors,  and
                  having  regard to  standards of  efficiency  and quality of a first class  resort,  Kerzner
                  undertakes to use its best efforts to ensure that  meaningful  joint  venture  arrangements
                  are made, where possible and appropriate, with qualified and suitable Bahamian companies.


1.5      Subject to Kerzner  proceeding with Phase III-B, and in  consideration of the Government's  approval
         for Kerzner's  expansion of its existing  Potable Water  Production  and  Treatment  Plant,  Kerzner
         undertakes  to buy from the Water and Sewerage  Corporation a minimum of $1.6 million worth of water
         per  annum,  at a per unit cost not to exceed the per unit cost to  Kerzner  of  producing  the same
         quantity of water at its  facility  ("the  Annual  Quota"),  subject to the supply of water  meeting
         Kerzner's quality  requirements,  which shall be no more onerous than those applied to Kerzner's own
         water  production  facility.  Kerzner's  undertaking  to buy  water  from  the  Water  and  Sewerage
         Corporation shall be from the date the New Hotel and Facilities open for business,  and continue for
         the period of 11 years from the Relevant  Date, as hereinafter  defined.  Kerzner may use its Annual
         Quota as and when its usage  requirements  demand  during the 12-month  period,  and shall be billed
         accordingly.  In the event that there are days that  Kerzner's  request for water  supply  cannot be
         fulfilled due to an inability to meet Kerzner's  quality  and/or  quantity  requirements,  Kerzner's
         Annual Quota shall be reduced accordingly.


2.       CASINO MANAGEMENT


Subject to continuing  compliance  with the  requirements of the Gaming Board of The Bahamas and the terms of
the Casino  Management  Agreement  as varied by the terms of this  Agreement,  or, in the case of  variations
made by the terms of Prior Heads of  Agreement,  as confirmed by this  Agreement,  the  Government  agrees as
follows:


2.1      To cause the existing  Casino  Management  Agreement  ("the Casino  Management  Agreement")  between
         Paradise  Enterprises Limited ("the Licencee") and the Hotel Corporation of The Bahamas ("HCB") with
         respect to the Atlantis Casino together with any extension or expansion,  thereof ("the Casino ") to
         be extended  to expire  Twenty  (20) years from the  earlier of 31st  December,  2007 or the date of
         substantial completion of Phase III ("the Relevant Date").


2.2      To support the annual  renewal of the  existing  Casino  Management  Licence  ("the  Licence")  with
         respect to the Casino to cover the period of the Casino Management Agreement;

2.3      Except for  obligation  to support the proposal  for the  operation of a slot casino at the Radisson
         Resort on Cable Beach and the  obligation  to  facilitate  the grant of a licence to the operators of
         the hotel situated on the  Southwestern  end of New  Providence,  presently  known as the South Ocean
         Golf and Beach Resort,  to the extent that such obligations still exist, no new casino licences shall
         be granted  with  respect to gaming  operations  in New  Providence  or Paradise  Island for a period
         expiring Twenty (20) years after the Relevant Date.


3.       CASINO MANAGEMENT FEES


Upon  commencement  of  construction  of Phase III-A and for a period of 20 years from the Relevant Date, the
Government  shall cause the terms as to annual  payments in respect of Casino Tax and Casino  Management Fees
in respect of the Casino to be as follows:


 3.1      Schedule:


         3.1.1     "Annual Licence Fee" of $100,000.00 per thousand square feet of floor space of the Casino;


         3.1.2     "Minimum Win Tax" of $4.3 million on gaming winnings up to $20 million;


         3.1.3     "Win Tax" of 10.0% of gaming winnings in excess of $20 million.


3.2      From the  commencement  of  construction  of Phase  III-A,  and for a  period  of 11 years  from the
         Relevant Date, the Government will permit to be deducted from the sums payable under 3.1 above:


         3.2.1     $5 million from the amount of the Annual Licence Fee;


         3.2.2    50% of the annual gaming Win Tax in excess of $20 million.


3.3      The  deduction  allowed by  paragraph  3.2.2  hereof  shall  cease to apply  with  respect to gaming
         winnings  exceeding  $175 million in any year up to and including the year 2010, and $200 million in
         each successive year.


3.4      In the event that the amount of, or formula for  computing the fees,  taxes and/or  annual  payments
         required to be made by Kerzner to the  Government,  or any of its  agencies,  in the  management  or
         operation of the Casino is changed  during the period  starting from the date of this  Agreement and
         ending on the date 20 years from the Relevant Date, the aggregate  amount of such payments shall not
         exceed the amount  payable  under this  Agreement.  For the  avoidance  of doubt,  the `fees,  taxes
         and/or annual  payments' to which this  paragraph  applies shall not include  levies not specific to
         the management or operation of a casino, such as payments made with respect to National Insurance.


3.5      Kerzner shall be permitted to continue to operate the Casino  following  the  expiration of the term
         extended by  paragraph  2.1  hereof.  At no time shall  Kerzner be treated on terms less  favourable
         than those applied to other  managers or operators of casinos in New  Providence or Paradise  Island
         with  respect to casino  fees and  casino  taxes,  or, in the event that there are no other  casinos
         operated in New Providence or Paradise  Island,  on terms less  favourable than those applied to the
         manager or operator of the next largest casino in The Bahamas.


3.6      Pending  the coming into  effect of the  incentives  granted by  paragraphs  3.1 or 3.2 hereof,  the
         provisions of paragraph 3 of the 1995 Heads of Agreement shall be in effect.


4.       HOTELS ENCOURAGEMENT ACT AND OTHER LEGISLATION


4.1      The proposed  development  comprising  Phase III (other than Harborside II which is separately dealt
         with in  paragraph 5 hereof)  shall be eligible  for  exemption  from customs duty in respect of all
         materials  necessary for the construction,  equipping,  furnishing and completing the development of
         Phase III pursuant to the Hotels Encouragement Act, Ch 289 ("HEA"), and other existing  legislation,
         and shall be treated as a `New  Hotel' for the  purposes  of  concessions  under the HEA.  The items
         subject to such relief shall specifically  include  construction  materials,  bunker oil and diesel,
         furniture,  fixtures,  casino games and equipment, and other equipment required for construction and
         equipping of all aspects of the Phase III development,  consistent with the practices  followed with
         respect  to the  Phase  II  development.  Similar  exemption  shall be  given  for the  fire  truck,
         ambulance and other items of equipment for the initial equipping of the Fire and Ambulance Station,.


4.2      All  construction  plant and vehicles  necessary for the Phase III  development may be imported into
         and exported from The Bahamas free of customs duties,  on a pre-approved  basis. Such approvals will
         be restricted to specialized  and/or heavy vehicles and equipment,  and shall be consistent with the
         practices followed in Phase II, including with respect to the requirement of a bond.

4.3      The New Hotel and Facilities,  the New Golf Course, Ocean Club Villas,  Marina Village, the Expanded
         Attractions,  the Fire and Ambulance Station and the Utilities and Infrastructure Expansion shall be
         exempted  from  payment  of Real  Property  Tax for a period of Ten (10)  years from the date of the
         opening for business of each such aspect of Phase III, and subject to the maximum levy  provided for
         by HEA for a further period of Ten (10) years.

4.4      No Stamp Duty shall be payable by Kerzner in respect of the  materials,  equipment  and  furnishings
         referred to in paragraphs 4.1 and 4.2 hereof consistent with the practices  followed with respect to
         the Phase II development.


5.       HARBORSIDE PHASE II CONCESSIONS


It is agreed as follows:


5.1      The  proposed  development   comprising   Harborside  Phase  II  be  exempted  from  customs  duties
         substantially  equivalent to those to be provided in respect of the other aspects of Phase III, with
         the exception that it is understood that stoves,  refrigerators and kitchen  appliances would not be
         eligible for duty exemptions.


5.2      The  Government  is in the process of reviewing  The Bahamas  Vacation  Plan and  Time-sharing  Act.
         Kerzner  shall be  entitled  to  receive  any  additional  benefits  that may  become  available  to
         developers of timeshare resorts in The Bahamas.


6.       SKILLS TRAINING FOR BAHAMIANS AND ENGAGEMENT OF NON-BAHAMIAN PERSONNEL


It is  agreed  that  Kerzner  will  maximize  the  employment  of  Bahamians  in all  stages of the Phase III
development  and,  arising  out of  the  Phase  III  development,  will  reasonably  promote  entrepreneurial
opportunities  for Bahamians.  The Government  recognizes that the timely completion of Phase III on a highly
accelerated  schedule,  and the successful operation of the completed Phase III to the highest  international
standards will necessitate the employment of non-Bahamians.  It is agreed as follows:


6.1      For the  construction  periods of Phase III,  Kerzner agrees to publicise and offer both  employment
         opportunities  and equal  opportunities  for qualified  Bahamian  contractors  to participate in the
         bidding process for Phase III, and to promote  appropriate  joint ventures between  non-Bahamian and
         Bahamian contractors.  The Government,  relying on the good faith efforts of Kerzner to maximize the
         employment of Bahamians,  undertakes to facilitate the grant of work permits and business  licences,
         and other necessary  Government or Government agency approvals on a specified and highly accelerated
         basis,  consistent with practices  followed in Phase II, in respect of such  non-Bahamian  personnel
         and contractors as Kerzner shall require.


6.2      Kerzner shall use best efforts to collaborate with The Bahamas  Technical and Vocational  Institute,
         or any other  agency  similar  in  purpose  designated  by the  Government  during the course of the
         development of Phase III.


6.3      In recognition of the need in the  management  and operation of the Paradise  Island  Properties for
         employees  with special  skills or experience,  Kerzner will be granted  Twenty-five  (25) new, work
         permits for non-Bahamian  employees based in The Bahamas on the same highly  accelerated basis as in
         paragraph 6.1 above.


6.4      Kerzner shall continue to maximize the  employment of Bahamian  musicians and  entertainers  and use
         reasonable efforts to acquire and display Bahamian artwork at the Paradise Island Properties.


6.5      Kerzner  will  continue  with and  further  develop  its  training  programmes,  for the  purpose of
         qualifying  more  Bahamians for  employment in the operation and  management of the Paradise  Island
         Properties,  and  collaborate  with the  School of  Hospitality  of the  College  of The  Bahamas in
         curriculum development and training.


7.       PHASE III PERMISSIONS


In order to minimize the  disruption of normal resort  operations  which will  necessarily  result during the
construction  period  of  Phase  III,  the  parties  recognize  that  timing  is  critical,  not  only  as to
commencement  and timely  completion of the  construction  works, but also as to the scheduling of such works
around high tourism  seasons,  and agree that the Government  will use its best  endeavours to facilitate the
grant of all necessary  permissions  and approvals,  consistent  with the practices  followed with respect to
the Phase II  development,  so as to allow Phase III to commence and proceed to completion on an  accelerated
schedule.  In the event that  Kerzner  experiences  undue delays or failure by Customs,  Exchange  Control or
other  relevant  Governmental  agency in the grant of  permissions  or  approvals,  Kerzner  shall notify the
Government  in writing of such  delays and the  Government  shall take  appropriate  action to  expedite  the
issuance of such delayed permissions or approvals.


8.       JOINT MARKETING


As of the 31st December,  2002,  being the expiration date of the existing joint marketing  agreement,  a new
agreement shall take effect upon the following terms:


8.1      During the 5 year period  commencing on the 1st January,  2003 the Government shall contribute up to
         $4 million per annum  towards the costs and expenses of the  marketing  activities of Kerzner as set
         forth or referred to in paragraph 8.2 below, on a basis to be matched dollar for dollar by Kerzner.


8.2      The costs and expenses to which the  contributions  referred to in  paragraph  8.1 above shall apply
         are the  direct  costs  (excluding  the  cost  of  salaries  paid to  employees  of  Kerzner  or its
         subsidiaries)  relating to (i) the staging of approved  marketing events,  (ii) marketing and public
         relations  activities  and  (iii)  the  production  and  placement  of  advertisements  in all media
         including,  but not limited to,  television,  radio and print,  to promote the  destination  and the
         Paradise Island Properties including Phase III.


9.       INFRASTRUCTURE IMPROVEMENTS


The Government,  for the benefit of the Bahamian  public and  recognizing  the  requirements of a world-class
tourism  destination,  will pursue  improvements to the infrastructure of New Providence and Paradise Island,
in particular, as follows:


9.1      The  Government  will continue to address the  improvement  of the road networks on New  Providence,
         including the access to and from Nassau International Airport and Paradise Island.


9.2      The Government will address needed and substantial  improvement of the Nassau International  Airport
         facility.


9.3      Any necessary  expansion of the facilities of BEC in order to meet the requirements of the completed
         Phase III shall be  undertaken  by and at the expense of BEC, in  particular  the  construction  and
         equipping  of a new 15MW  Transformer  Substation  on  Paradise  Island,  together  with  all  other
         supporting  infrastructure  necessary to support secure electricity  supplies to the Paradise Island
         Properties  and  Phase  III,  without  need  for  unusual  load-shedding  or other  interruption  in
         electricity supply to the Paradise Island Properties and Phase III.


9.4      The  Government   will  undertake  any  necessary   expansion  of  the  facilities  of  The  Bahamas
         Telecommunications  Company in order to meet the  requirements  of Phase III prior to the opening of
         the relevant aspect of Phase III.


9.5      The Government shall operate and maintain the Fire and Ambulance Station.


10.      UNITED STATES TAX DEDUCTIONS


The  Government  will continue to pursue  negotiations  with the United States with a view to qualifying  The
Bahamas  as an  eligible  country  allowing  the costs of  holding  business  conventions  in the  country as
deductions on United States taxes on terms comparable to those applicable to other jurisdictions.


11.      PHASE III-B AND REDUCTION OF INCENTIVES


The parties agree as follows:


11.1     If Kerzner determines on or before 31st December,  2004 ("the Phase III-B  Determination  Date") not
         to proceed with some or all of the aspects of Phase III-B,  Kerzner  shall notify the  Government by
         way of a notice in writing addressed to the Secretary of the National Economic Council,  with a copy
         to the  Permanent  Secretary to the Ministry of Financial  Services and  Investments  (or such other
         addresses as the  Government  shall notify to Kerzner in writing),  listing  those  aspects of Phase
         III-B not to be constructed ("a Phase III-B Notice").


11.2     Upon  service of a Phase III-B  Notice,  and provided  that the  Government  and its  agencies  have
         complied with all of their obligations  hereunder,  the incremental value of the incentives  granted
         by paragraph  3.2 hereof as compared to the value of the  incentives  granted  pursuant to paragraph
         3.2 of the 1995 Heads of Agreement  shall be reduced as of the date of the Phase III-B Notice by the
         Relevant  Percentage.  The `Relevant  Percentage' shall be 100% minus the amount of dollars actually
         invested in or committed to Phase III  expressed as a percentage  of $600  million,  being the total
         investment  contemplated  herein.  The  incentives  and  agreements  contained or referred to herein
         shall otherwise remain in full force and effect.


12.      GOLF COURSE


12.1     Recognizing  the need for another golf  facility  within close  proximity  to Paradise  Island,  the
         Government  agrees,  subject to the  environmental  matters  referred to in paragraph 13 hereof,  to
         facilitate the grant of all necessary  permissions  to allow the  development of Athol Island into a
         new  18-hole  golf  facility.  In  developing  the golf  course,  the  parties  will have  regard to
         environmental  considerations,  including the  possibility of developing a links-style  golf course.
         Further in this regard,  the parties will meet the  reasonable  protocols  and  requirements  of the
         relevant  Government  Agencies  including  the  Ministries  of  Agriculture,   Fisheries  and  Local
         Government,  the Ministry of Health and the BEST  Commission,  and give proper  consideration to the
         concerns of The Bahamas National Trust.


12.2     The ownership and  development  of the golf facility  shall be conducted as a joint venture  between
         Kerzner and an agency to be nominated  by the  Government,  on terms  reasonably  acceptable  to the
         parties ("the JV Entity").  The Government agrees that it shall lease such land,  including any land
         to be  reclaimed,  to the JV  Entity  for a  99-year  term,  at a  nominal  rent and  Kerzner  shall
         contribute to the JV Entity capital of at least  $15,000,000  for the remediation and development of
         the land (with the benefit of full HEA concessions).


12.3     The  management  and  operation  of the golf  facility  shall be subject to a  management  agreement
         between the JV Entity and Kerzner,  or a qualified  third party operator  acceptable to the parties,
         on commercially reasonable terms.


12.4     It is  agreed  that  the  golf  facility  shall be  accessible  to  guests  of the  Paradise  Island
         Properties,  guests of other resort properties on Paradise Island and New Providence, as well as the
         general  public  on terms to be  agreed,  including  tee-time  management  policies  and  reasonably
         competitive  green fees, taking into  consideration the world-class  nature of such facility and the
         capital expended thereon.


12.5     It is agreed  that the only  buildings  to be  constructed  on Athol  Island  will be  buildings  in
         connection  with the  maintenance  and  operation of the golf course and facility,  and,  except for
         living  accommodation  for golf course staff or security (if deemed  necessary),  the development of
         Athol  Island as  contemplated  by this  Agreement  shall not  include the  construction  of private
         residences.


12.6     The parties agree that the  development  of Athol Island shall not affect the public's  right to use
         its beaches.


13.      ENVIRONMENTAL INTEGRITY


Kerzner agrees as follows:


13.1     To commission and submit for the expeditious  consideration  of the BEST Commission an Environmental
         Impact Study or Studies  ("EIS"),  prepared by qualified  consultants  in connection  with Phase III
         which studies shall be evaluated by the BEST Commission or any other relevant Government agencies.


13.2     To meet the reasonable  protocols and requirements of the relevant  Government  agencies,  including
         the Ministry of  Agriculture,  Fisheries and Local  Government,  the Ministry of Health and the BEST
         Commission in relation to all aspects of the development and operation of Phase III.


13.3     Give proper consideration to the concerns of the Bahamas National Trust.


13.4     To the  extent  reasonably  requested  by the  BEST  Commission,  to pay the  reasonable  costs of a
         qualified  consultant  or  consultants  to assist  the BEST  Commission  in  evaluating  the EIS and
         monitoring  compliance with the protocols and requirements referred to in paragraph 13.2 hereof with
         respect to the Dolphin Experience and the development of the New Golf Course on Athol Island.


14.      SHARES AND COMMUNITY CONTRIBUTION PROGRAMME


Kerzner agrees as follows:


14.1     Kerzner shall make good faith efforts to make available  500,000 shares in Kerzner for  subscription
         by residents of The Bahamas by the  substantial  completion of Phase III-B,  subject to consultation
         with  Kerzner's  bankers  and the  Central  Bank of The  Bahamas,  and  feasibility  under  laws and
         regulations  governing  Kerzner  and  its  shares,  and  taking  into  account  relevant  commercial
         considerations.


14.2     To contribute the sum of US$2,000,000  to benefit such community  programmes in The Bahamas as shall
         be designated by the Government,


15.      ASSIGNMENT


Kerzner shall not assign its rights or obligations  under this Agreement  without the written  consent of the
Government,  such  consent not to be  unreasonably  withheld or delayed.  This  provision  shall not apply to
assignment by Kerzner to or between its  wholly-owned or controlled  entities,  provided however that Kerzner
shall notify the Government in writing within 14 days of any such assignment.


16.      FURTHER ASSURANCE


The  parties to this  Agreement  will do all acts and things and sign and  execute  all  documents  and deeds
requisite  for the purpose of  implementing  the terms of this  Agreement  in such form and to such effect as
the other party may reasonably require.


17.      MUTUAL WARRANTY AND ACKNOWLEDGMENT


17.1     Each of the parties warrants its power and authority to enter into these Heads of Agreement.


17.2     The parties  hereto agree that they will work together in a spirit of mutual  co-operation  and good
         faith  towards the timely  completion  of Phase III,  and will  co-operate  with each other to allow
         reasonable  monitoring of compliance with the terms of these Heads of Agreement,  provided that such
         monitoring shall not place unreasonable  burdens on either party or unreasonably hinder or delay the
         development of Phase III.  During the  development of Phase III,  Kerzner agrees to provide  reports
         to the Ministry of Finance,  with copies to the Ministry of Financial  Services and  Investments and
         to the Secretary to the National  Economic  Council,  summarizing the cumulative  amount expended by
         Kerzner in the development of Phase III on a quarterly basis.


17.3     Notwithstanding   anything  to  the  contrary  contained  or  referred  to  herein,  the  Government
         acknowledges  that Kerzner shall at no time be treated upon terms,  particular or general,  any less
         favourable  than those  available  to any other  operators  of resorts  with at least 700 rooms that
         include a casino, located in New Providence or Paradise Island.


17.4     Either  party,  upon  receipt of a specific  request in writing from the other,  shall  provide such
         information  as the  requesting  party  shall  reasonably  require  to enable  such party to monitor
         compliance of the other with the relevant terms of this Agreement.


18.      SEVERANCE


If any provision of these Heads of Agreement is declared by any judicial or other  competent  authority to be
void,  voidable,  illegal  or  otherwise  unenforceable  the  parties  shall  amend  that  provision  in such
reasonable  manner as achieves the intention of the parties  without  illegality or at the  discretion of the
parties the  provision  may be severed from these Heads of Agreement  and the  remaining  provisions of these
Heads of Agreement shall remain in full force and effect.


19.      FORCE MAJEURE


If for any reason  outside the control of either  party to this  Agreement,  including,  without  limitation,
such  events as war,  industrial  action,  hurricanes,  floods,  Acts of God,  terrorist  activities,  travel
advisories affecting travel to The Bahamas,  freight embargoes,  civil commotion,  or any significant adverse
change  in  economic  conditions  or in the  financial  markets  of the  United  States  of  America,  or any
significant  decrease or  disruption  in airlift to The Bahamas any  provision  of this  Agreement  cannot be
performed  or  fulfilled,  then  for  the  duration  of such  condition  Kerzner  shall  be  excused  from so
performing,  and the incentives  granted pursuant to this Agreement shall be extended for a reasonable period
of time.


20.      HEADINGS


Headings  contained  in  these  Heads  of  Agreement  are for  reference  purposes  only  and  should  not be
incorporated  into these Heads of Agreement  and shall not be deemed to be any  indication  of the meaning of
the paragraphs to which they relate.


21.      AMENDMENTS


Any amendment to these Heads of Agreement shall be in writing and executed by both parties.


22.      COUNTERPARTS


These Heads of Agreement may be executed in any number of counterparts,  each of which counterparts,  when so
executed and  delivered,  shall be deemed to be an original and all of which  counterparts,  taken  together,
shall constitute one and the same Heads of Agreement.


23.      PREVIOUS HEADS OF AGREEMENT


These Heads of  Agreement  hereby  amend and restate  the Prior  Heads of  Agreement,  to the effect that the
Prior Heads of Agreement  shall be  superceded  by these Heads of  Agreement,  subject to the  provisions  of
paragraph 3.6 hereof.  For the avoidance of doubt, any written  agreements  emanating from the prior Heads of
Agreement  (such as  agreements  entered  into  under  the HEA)  shall  remain in full  force  and  effect in
accordance with their respective terms.


24.      GOVERNING LAW AND JURISDICTION


This Agreement  shall be governed by the laws of the said  Commonwealth  of The Bahamas and in the event that
any suit or legal action is commenced by either party,  the other party  agrees,  consents and submits to the
exclusive, jurisdiction of the courts of the said Commonwealth of The Bahamas.


                                        [Signature page to follow]










                                            THE GOVERNMENT OF THE COMMONWEALTH OF THE BAHAMAS


                                            By :


                                            /s/ Wendell Major
                                            ---------------------------------------------------

                                            Name:  Wendell Major


                                            Title:  Secretary of the National Economic Council





                                            KERZNER INTERNATIONAL LIMITED


                                            By :


                                            /s/ Solomon Kerzner
                                            ---------------------------------------------------


                                            Name:  Solomon Kerzner


                                            Title:  Chairman and Chief Executive















                                    Extract from 1995 Heads of Agreement


For the purposes of Paragraph 3.6:


 3.1      Schedule:


         3.1.1     "Annual Licence Fee" of $100,000.00 per thousand square feet of floor space of the Casino;


         3.1.2     "Minimum Win Tax" of $4.3 million on gaming winnings up to $20 million;


         3.1.3     "Win Tax" of 12.5% of gaming win between $20 million and $120 million;


         3.1.4     "Win Tax" of 10.0% of gaming winnings in excess of $120 million.


3.2      From the period of 11 years from the said  completion  and opening of the Project1,  the  Government
         will permit to be deducted from the sums payable under 3.1 above:


         3.2.1     $5 million from the amount of the Annual Licence Fee;


         3.2.2    45% of the annual gaming Win Tax in excess of $20 million but less than $120 million.






- --------
1 Date of completion of Phase II and opening of the Project - December 1998