Morgans Hotel Group board check in to review their options

Yesterday saw the board of Morgans Hotel Group, the New York based hotel operator, formally announce that it plans to review its “strategic options”.  Morgans Group, which listed on Nasdaq back in February 2006, raising USD 360 million in the process, had earlier this year announced that the group would undertake a rights offering to raise USD 100 million, USD 35 million of which would be used to “retire the credit facility secured by the Delano South Beach Hotel in Florida, with the remaining USD 65 million being used to fund expansion of the business and for general corporate requirements”. This plan was postponed however after it appeared to pit shareholders against creditors. But the “strategic review”, according to Morgans’ press statement, appears to be linked to the “re-election” of the existing board members.

This announcement seems to have stoked the flames of shareholders even more, with Caerus Global Investors LLC reportedly trying to encourage Morgans to consider a formal sale process based on some insight they seem to have on informal interest expressed in the company late last year, whereas OTK Associates LLC, reportedly the largest shareholder in Morgans Hotels, claims that this is just the board’s way of deferring and detracting from a potential proxy fight.

Oh, to be a fly on the wall in that shareholders meeting on the 14th June!

Filed under: hotels, dealmaking