Morgans Hotel Group Provides Corporate Update
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.
The Company expects to provide additional updates on its earnings call for the year ended December 31, 2015.
ABOUT MORGANS HOTEL GROUP
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.
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SOURCE Morgans Hotel Group Co.