This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Morgans Hotel Group Voluntarily Reschedules Rights Offering And Extends Closing Date

NEW YORK, April 9, 2013 /PRNewswire/ -- Morgans Hotel Group Co. (NASDAQ: MHGC) ("Morgans" or the "Company"), the New York-based hospitality management company, today announced that it has voluntarily rescheduled the $100 million pro-rata rights offering that it announced on April 1, 2013. As a result, the subscription period for the rights offering will close after the record date for the Company's 2013 annual meeting. The postponement ensures that any potential changes to the shareholder base as a result of the pro-rata rights offering will have no bearing on the outcome of voting at the Company's 2013 annual meeting. The new timeline underscores the sole purpose of the rights offering – to enhance our ability to create long-term value for all shareholders.

On April 1, 2013, the Company announced that it entered into a transformative transaction with The Yucaipa Companies (" Yucaipa") that reduces the Company's debt and preferred stock by $230 million, which includes the elimination of $113 million of debt maturing in 2014, and cancels warrants to acquire 12.5 million shares of common stock at $6 per share in exchange for the Company's ownership interest in Delano South Beach and The Light Group. The rights offering was announced as an integral part of the transaction to pay off debt, reduce near-term maturities and provide funding for growth.

"The asset exchange with Yucaipa and rights offering we announced last week accelerate the growth of our business, significantly reduce our risk profile and enhance our ability to create long-term value for all our shareholders," said Michael Gross, CEO of Morgans. "We entered into this transaction solely because we believe it is in the best interests of our shareholders. This transaction was the culmination of a thorough 15-month review process by a special committee of the Board consisting of independent and disinterested directors, which retained its own independent financial and legal advisors."

OTK Associates, LLP ("OTK") has launched a proxy contest to attempt to take complete control of the Company without paying a premium or any consideration to shareholders.  OTK subsequently filed a lawsuit alleging that the purpose of the Company's rights offering is to place a large block of shares with Yucaipa in advance of the annual meeting record date. This allegation is not and was never true, and by extending the closing of the rights offering, this assertion is entirely moot.

Mr. Gross continued, "OTK Associates has repeatedly misstated the Board's motivation for the rights offering and has filed a meritless lawsuit against Morgans and some of our directors.  Given its Board representation, OTK knows full well this transaction was not in any way a response to OTK's proxy contest and had been under consideration long before its proxy contest was announced. While our original intention in changing the shareholder meeting date was to ensure that shareholders who participate in the pro-rata rights offering with knowledge of the Yucaipa transaction would have an opportunity to vote at the meeting, we have voluntarily rescheduled the closing of the rights offering to remove any question about the Board's motivations."

Mr. Gross noted, "OTK was fully aware of the transaction for over a year through its Board representation, and on numerous occasions it had the opportunity to propose an alternative source of financing or other transaction.  It never did and now OTK wants to take control of the company without paying a premium to shareholders."

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.27 0.00%
FB $101.00 0.00%
GOOG $684.12 0.00%
TSLA $149.50 4.10%
YHOO $27.10 0.00%


Chart of I:DJI
DOW 15,914.74 -99.64 -0.62%
S&P 500 1,851.86 -0.35 -0.02%
NASDAQ 4,283.5920 +14.8290 0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs