Morgans Hotel Group refinances Hudson debt

Morgans Hotel Group Co. has announced it has refinanced the Hudson mortgage and mezzanine debt of $227.7 million, which was scheduled to mature in October 2011. The Company retired the mortgage and mezzanine debt with net proceeds of a new $135 million non-recourse mortgage loan agreement secured by Hudson, along with cash on hand and in escrow.

Michael Gross, MHG CEO, said: “As a result of the Hudson refinancing, we have deleveraged our balance sheet and addressed all significant near-term debt maturities. Along with the new $100 million revolving line of credit announced in July, we have completed the final steps needed in order to transform our capital structure and position the Company for growth.”

Under the terms of the new Hudson mortgage agreement, $115 million was drawn at closing with the remaining $20 million to be drawn based on the hotel achieving certain levels of cash flow. The loan bears interest at LIBOR plus 4.0%, subject to a LIBOR floor of 1.0%. The company also entered into an interest rate protection agreement which caps LIBOR at 3.0%. The loan matures in two years with three one-year extension options subject to certain conditions. Deutsche Bank Securities Inc. originated the loan.

Morgans Hotel Group Co. property


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