NEW YORK, Feb. 10, 2016 /PRNewswire/ -- Morgans Hotel
Group Co. (NASDAQ: MHGC) ("Morgans" or the "Company") today
provided the following update:
Maturity Extension and Debt Prepayment
As previously disclosed by the Company on Form 8-K filed with
the Securities and Exchange Commission on February 9, 2016, certain subsidiaries of the
Company exercised their first option to extend the initial maturity
date of the nonrecourse mortgage notes and the mezzanine loans
outstanding under the Hudson/Delano 2014 Mortgage Loan by one year
from February 9, 2016 to February 9, 2017 and prepaid approximately
$28.2 million of outstanding
indebtedness under the Hudson/Delano 2014 Mortgage Loan. The
prepayment reduced the aggregate principal amount of indebtedness
outstanding under the Hudson/Delano 2014 Mortgage Loan from
$450.0 million to approximately
$421.8 million, which provides the
Company with lower leverage and expected annual cash flow savings
of approximately $1.7 million.
The prepayment was made with cash on hand. Following the
prepayment, the Company believes that it has sufficient liquidity
to meet its current working capital needs.
Strategic Process and CEO Search Updates
The Company is also providing updates on the Board of Director's
previously announced process to monetize Hudson New York and Delano South Beach and search for a permanent
Chief Executive Officer.
- On December 7, 2015, the Company
announced that it had engaged Hodges Ward
Elliot, a leading hotel brokerage firm, to commence a
broker-marketed monetization of Hudson
New York and Delano South
Beach. The marketing process is underway with a number of
prospective domestic and international parties and an expected call
for offers by the end of the first quarter of 2016. The Company
currently expects to complete the process during the second quarter
of 2016.
- In addition, the search process for a new Chief Executive
Officer remains a high priority of the Board of Directors. The
Board has interviewed a number of highly qualified candidates with
significant industry experience and has narrowed the search. The
Board currently expects to finalize that process in the near
term.
The Company expects to provide additional updates on its
earnings call for the year ended December
31, 2015.
ABOUT MORGANS HOTEL GROUP
Morgans Hotel Group Co. 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, South Beach and
London, 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 also
licenses its brand through Delano in Las
Vegas and 10 Karaköy in Istanbul, Turkey. Morgans Hotel Group
has other hotels in various stages of development to be operated
under management or franchise agreements, including a Mondrian
property in Doha, Qatar and a
Delano in Dubai.
Forward-Looking and Cautionary Statements
This report may contain certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are generally identifiable by
use of forward-looking terminology such as "may," "will," "should,"
"potential," "intend," "expect," "endeavor," "seek," "anticipate,"
"estimate," "overestimate," "underestimate," "believe," "could,"
"project," "predict," "continue" or other similar words or
expressions. These forward-looking statements reflect the Company's
current views about future events and are subject to risks,
uncertainties, assumptions and changes in circumstances that may
cause its actual results to differ materially from those expressed
in any forward-looking statement. Forward-looking statements in
this report include, without limitation, statements regarding the
Company's expectation related to expected cash flow savings and
liquidity and the Board of Director's strategic process, including
the broker-marketed monetization of Hudson New York and Delano South as well as the progress of the
search for a Chief Executive Officer.
Important risks and factors that could cause the Company's
actual results to differ materially from those expressed in any
forward-looking statements include, but are not limited to
economic, business, competitive market and regulatory conditions
such as: a downturn in economic and market conditions, both in the
U.S. and internationally, particularly as it impacts demand for
travel, hotels, dining and entertainment; the Company's levels of
debt, its ability to refinance its current outstanding debt, repay
outstanding debt or make payments on guaranties as they may become
due, general volatility of the capital markets and the Company's
ability to access the capital markets and the ability of its joint
ventures to do the foregoing; the impact of financial and other
covenants in the Company's loan agreements and other debt
instruments that limit the Company's ability to borrow and restrict
its operations; the Company's history of losses; the Company's
ability to compete in the "boutique" or "lifestyle" hotel segments
of the hospitality industry and changes in the competitive
environment in the Company's industry and the markets where it
invests; the Company's ability to protect the value of its name,
image and brands and its intellectual property; risks related to
natural disasters, terrorist attacks, the threat of terrorist
attacks and similar disasters; risks related to the Company's
international operations, such as global economic conditions,
political or economic instability, compliance with foreign
regulations and satisfaction of international business and
workplace requirements; the Company's ability to timely fund the
renovations and capital improvements necessary to maintain its
properties at the quality of the Morgans Hotel Group and associated
brands; risks associated with the acquisition, development and
integration of properties and businesses; the risks of conducting
business through joint venture entities over which the Company may
not have full control; the Company's ability to perform under
management agreements and to resolve any disputes with owners of
properties that the Company manages but does not wholly own;
potential terminations of management agreements; the impact of any
material litigation, claims or disputes, including labor disputes;
the seasonal nature of the hospitality business and other aspects
of the hospitality industry that are beyond the Company's control;
the Company's ability to comply with complex U.S. and international
regulations, including regulations related to the environment,
labor, food and beverage operations and data privacy; the Company's
ability to maintain effective and competitive technology platforms;
ownership of a substantial block of the Company's common stock by a
small number of investors and the ability of such investors to
influence key decisions; the impact of any dividend payments or
accruals on the Company's preferred securities on its cash flow and
the value of its common stock; the impact of the strategic plans
established by the Company's Board of Directors; the impact of
recent changes in the Company's Board of Directors; and other risk
factors discussed in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31,
2014, which was filed with the Securities and Exchange
Commission (the "SEC") on March 13,
2015, and other documents filed by the Company with the SEC
from time to time. All forward-looking statements in this report
are made as of the date hereof, based upon information known to
management as of the date hereof, and the Company assumes no
obligations to update or revise any of its forward-looking
statements even if experience or future changes show that indicated
results or events will not be realized.
Contacts:
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|
Investors
|
Media
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Richard
Szymanski
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Daniel
Gagnier/
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Morgans Hotel Group
Co.
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Nathaniel
Garnick
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212.277.4188
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Sard Verbinnen &
Co
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212.687.8080
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SOURCE Morgans Hotel Group Co.