Morgans Hotel Group eliminated at least one-third of its corporate staff Monday, according to the Wall Street Journal. The company had previously indicated intentions to reduce costs, according to people close to the company, resulting in yesterday's purge.
Over 20 layoffs took place, and among them included top executives and longtime employees. Most areas of the company were affected, from operations to the legal group. According to Hospitality Net, Jason Kalisman, the company's acting CEO and chairman, released a statement last month that the board was looking to "reduce costs and corporate overhead," and had a plan in place for such procedures.
In recent years, Morgans' CEO has seen pressures from stakeholders and creditors, including private-equity investor Ronald Burkle, to sell the company. However, Morgans has also recently taken steps to reduce calls to find a buyer. Despite a market cap of less than $300 million, the hotelier remains a strong name in the industry. Originally founded by Ian Schrager in the 1980s, Morgans is often credited with introducing the concept of the boutique hotel, which has since grown extremely popular.
Just last month, Morgans refinanced its $180 million mortgage loan secured by Hudson in New York and its $100 million revolving credit facility secured by Delano South Beach, according to PYMNTS. The mortgage loan and credit facility were refinanced with nonrecourse mortgage and mezzanine loans with an aggregate principal amount of $450 million, which was fully funded at closing. The new loan is secured by mortgages encumbering Hudson and Delano South Beach and pledges of equity interests in certain subsidiaries of Morgans and matures on February 6, 2016, with three, one-year extension options subject to certain conditions. The loan was provided by Citigroup Global Markets Realty and Bank of America.