OTK Associates LLC, the largest shareholder of Morgans Hotel Group Co. (Nasdaq: MHGC) with 13.9% of the outstanding common stock of the company, today disclosed that it intends to nominate a slate of seven candidates to the company’s board of directors and notified the company of its intent in a letter on March 15, 2013. Morgans' 2013 Annual Meeting of Shareholders is scheduled to be held on May 15, 2013.
OTK Associates also disclosed a letter to MHGC shareholders outlining why it believes a reconfiguration of the Board is urgently needed. The full text of the letter follows:
March 18, 2013
Dear Fellow Stockholders,
We are writing to inform you that on Friday, March 15, OTK Associates, LLC delivered notice to Morgans Hotel Group of its intent to nominate seven qualified candidates to the company’s board of directors at the upcoming annual meeting of stockholders on May 15, 2013.
As the company's largest stockholder, with a 13.9% ownership stake or 4,500,000 common shares of Morgans, we are seeking your support to elect directors that have the skills and experience necessary to either grow the business and return the company to profitability or to appropriately evaluate and pursue strategic alternatives in a disinterested fashion. We are nominating a slate of directors that brings significant lodging industry expertise, capital markets experience and superior hotel operating acumen. We strongly believe that a reconfigured board is a prerequisite for improving the company's financial performance and competitive position, and for harvesting additional value from its existing asset base.
OTK is a partnership between families that have a demonstrated track record of creating value in the real estate and lodging industries. OTK acquired its position in Morgans more than five years ago and has not sold any shares since that time. During this period, OTK has observed as various management teams and board members squandered resources and failed to capitalize on the extraordinary brand value of the company. OTK believes that new leadership is urgently needed to protect the interests of common stockholders and maximize stockholder value going forward, and we believe the majority of Morgans' common stockholders will agree.