Renewed appeal for company sale after Morgans' CEO resigns4 Sep, 2013 By: David Eisen
The Morgans Hotel Group saga continues. In June, amid stockholder dissatisfaction, there were rumblings of a possible sale of the company. Today, after the resignation of Morgans' CEO, Michael Gross, demands for a sale have again come to the forefront.
Billionaire Ron Burkle, an investor in Morgans Hotel Group Co. through his company, Yucaipa Cos., demanded its board sell the company after the announcment that Gross stepped down, resorting to incendiary language in a letter he wrote to Chairman Jason Kalisman, Morgans' interim CEO. "Stop acting like a spoiled child. Stop playing with the company as though it’s your new toy. Get Morgans on the market and sell it to an appropriate buyer. It’s time to sell now for all stockholders benefit. Ask your mother to buy you something else," the letter read.
Morgans announced the change in leadership yesterday after its largest shareholder, OTK Associates LLC, led an ouster of the board in June. OTK, which was founded by Kalisman, owns about 14 percent of the New York-based hotelier’s shares. Burkle's letter further read: "Please keep in mind that we have over $200 million of your debt and in the money warrants for approximately 30 percent of your stock, but you act like your less than 15 percent is sole control."
Burkle's letter, which was dated August 30 and was filed with the U.S. Securities and Exchange Commission, can be read in its entirety, here.
OTK in April sued Morgans board members over a recapitalization deal with Yucaipa. OTK called a proposed swap for the Delano South Beach and a $100-million rights offering “insider dealings” that would benefit Yucaipa while Burkle was on the board.
Gross will be paid in part a lump sum of $500,000, a grant of 58,334 restricted stock units, and 25,000 additional shares that will vest a year from his departure date of August 30, Bloomberg reports.
Topic : Morgans Hotel Group
External Source : Bloomberg, Street Insider
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