Morgans Hotel Group Co (MHGC)

[Enterprising Investor]

Morgans Hotel Group Provides Corporate Update (2/10/16)

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.

http://www.prnewswire.com/news-releases/morgans-hotel-group-provides-corporate-update-300218393.html