Morgans Hotel Group Future In Limbo

Morgans Hotel Group Retains Morgan Stanley

Morgans Hotel Group Co. (NASDAQ: MHGC), the New York-based hospitality management company, yesterday disclosed that at the beginning of the year, the Morgans Board of Directors formed a special transaction committee to evaluate a full range of alternatives, including the potential sale or merger of the Company.

Morgans Hotel Group Morgans Hotel Group Co. (NASDAQ: MHGC), the New York-based hospitality management company, yesterday disclosed that at the beginning of the year, the Morgans Board of Directors formed a special transaction committee to evaluate a full range of alternatives, including the potential sale or merger of the Company. Earlier this month the committee retained Morgan Stanley & Co. LLC as its financial advisor to assist the Company in exploring a full range of strategic alternatives. 

Jason T. Kalisman, Morgans' Chairman of the Board, stated: "As fiduciaries, Morgans' Board is committed to maximizing value for our stockholders and, as we have consistently stated, the Board is constantly exploring all opportunities to do what is right for all stockholders.  This has always included evaluating transactions as large as a potential sale or merger – but undertaken from a position of strength and flexibility. The engagement of Morgan Stanley to assist the committee in its strategic review allows the committee to draw on the insight and experience of a leading investment bank. Our stockholders have voiced their desire to know where the Board stands on these issues, and thus we felt it appropriate to share the fact that we had already taken the step of retaining advisors as we undergo the strategic review process."

The Company will update its stockholders on further developments once the Board of Directors concludes this review of its strategic alternatives and has approved any resulting transaction.

MORGANS HOTEL GROUP URGES STOCKHOLDERS TO VOTE FOR ITS NINE DIRECTOR NOMINEES ON THE WHITE PROXY

In advance of the meeting, the Company asks stockholders to consider the following:


  • The current Board was overwhelmingly elected last year with a clear mandate: address the serious issues and mistakes made by prior leadership and execute on a plan to create value for stockholders.  It has delivered on its promises to take decisive action and produce tangible results, and will continue to do so. 
  • Less than a year ago, stockholders were faced with a massively dilutive and value destroying transaction with affiliates of The Yucaipa Companies, LLC ("Yucaipa") as counterparties.  Stockholders were told there were no other options available.  Stockholders were not fooled.  Recent Yucaipa actions intended to support Kerrisdale should be taken as a clear warning of Yucaipa's desire to insert itself back into control of Morgans.  We believe there is no reason to re-introduce the very real risk of Yucaipa once again seeking to appropriate value from stockholders in the same ways that were so glaringly exposed during last year's election.
PROTECT YOUR INVESTMENT – VOTE THE WHITE PROXY CARD TODAY

Stockholders are encouraged to vote by telephone or Internet according to the instructions on the WHITE proxy card. Voting by telephone or Internet is the best way for stockholders to ensure that their votes will be counted. Stockholders who have questions or need assistance voting their shares, or wish to change a prior vote of their shares, may call Okapi Partners toll-free at (877) 796-5274 or contact them by email at info@okapipartners.com.

About Morgans Hotel Group

Morgans Hotel Group Co. (NASDAQ: MHGC) is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates Delano in South Beach, Mondrian in Los Angeles, New York and South Beach, Hudson in New York, Morgans and Royalton in New York, Clift in San Francisco, Shore Club in South Beach and Sanderson and St Martins Lane in London. Morgans Hotel Group has ownership interests or owns several of these hotels. Morgans Hotel Group has other hotels in various stages of development to be operated under management or franchise agreements.  These include Delano properties in Las Vegas, Nevada and Moscow, Russia; Mondrian properties in London, England, and Doha, Qatar; and a Morgans Original in Istanbul, Turkey. Morgans Hotel Group also owns a 90% controlling interest in The Light Group, a leading lifestyle food and beverage company.



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