Tag Archives: Morgans Hotel Group

Business, Finance, Occupation & Industry

Why Morgans Hotel Is Poised to Pull Back

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By Brian Pacampara, The Motley Fool

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool’s free investing community, hotel developer Morgans Hotel Group has received the dreaded one-star ranking.

With that in mind, let’s take a closer look at Morgans Hotel and see what CAPS investors are saying about the stock right now.

Morgans Hotel facts

   

Headquarters (founded)

New York, N.Y. (2005)

Market Cap

$203.1 million

Industry

Lodging

Trailing-12-Month Revenue

$189.9 million

Management

CEO Michael Gross

CFO Richard Szymanski

Return on Capital (average, past 3 years)

(1.2%)

Cash/Debt

$5.9 million/$538.1 million

Competitors

Boutique Hotels & Resorts International

Ian Schrager

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 40% of the 117 members who have rated Morgans Hotel believe the stock will underperform the S&P 500 going forward.

A couple of months ago, one of those Fools, All-Star NovaTodd, succinctly summed up the Morgans Hotel bear case for our community:

Sales per employee is a paltry $41,000, and these guys have not been FCF positive since 2005. Sales and Book Value have both been in decline since 2007, and the company carries $500 million in debt (more than two times TTM Revenue). It’s hard to find anything to like with this one.

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The article Why Morgans Hotel Is Poised to Pull Back originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

OTK Associates Obtains Delay of Morgans Hotel Group's Rights Offering

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By Business Wirevia The Motley Fool

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OTK Associates Obtains Delay of Morgans Hotel Group’s Rights Offering

NEW YORK–(BUSINESS WIRE)– OTK Associates LLC, the largest stockholder of Morgans Hotel Group Co. (NAS: MHGC) with 13.9% of the outstanding common stock of the company, today commented on the postponement of Morgans’ recently announced rights offering and recapitalization plan pending a hearing for a preliminary injunction in Delaware Chancery Court. The hearing is expected to be scheduled before May 15, 2013.

OTK is pleased that the Morgans Hotel Group agreed to delay the rights offering, as OTK had requested in its motion for a temporary restraining order. All shareholders should be deeply troubled by the current board of directors’ continued waste of corporate assets to advocate for a coercive and dilutive transaction that OTK believes is invalid. Further, the use of company funds to change sharehholder voting rules and diminish voting rights calls into question this board’s fiduciary duties and responsibilities.

OTK looks forward to presenting to the Delaware Chancery Court its case that the company’s recapitalization plan is invalid under Delaware law and requesting that the court invalidate the board’s decision to retroactively postpone the 2013 annual meeting and reset the corresponding record date.

IMPORTANT INFORMATION

STOCKHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO SOLICITATION OF PROXIES BY OTK ASSOCIATES, LLC AND ITS AFFILIATES FROM THE STOCKHOLDERS OF MORGANS HOTEL GROUP CO. FOR USE AT THE 2013 ANNUAL MEETING OF MORGANS HOTEL GROUP CO. WHEN THEY ARE AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. WHEN COMPLETED, SUCH MATERIALS WILL, ALONG WITH OTHER RELEVANT DOCUMENTS, BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION’S WEBSITE AT HTTP://WWW.SEC.GOV OR BY CONTACTING THE PARTICIPANTS’ PROXY SOLICITOR, OKAPI PARTNERS, TOLL FREE AT (877) 869-0171, OR BY EMAIL TO INFO@OKAPIPARTNERS.COM.

INFORMATION RELATING TO THE POTENTIAL PARTICIPANTS IN A POTENTIAL PROXY SOLICITATION IS CONTAINED IN EXHIBIT 1 TO THE SCHEDULE 14A FILED PURSUANT TO RULE 14A-12 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY OTK ASSOCIATES, LLC ON APRIL 8, 2013, AS IT MAY BE AMENDED FROM TIME TO TIME. THE SCHEDULE 14A AND ANY AMENDMENTS ARE AVAILABLE AT NO CHARGE ON THE SECURITIES AND EXCHANGE COMMISSION’S WEBSITE AT HTTP://WWW.SEC.GOV.

Investors:<br …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

OTK Associates Files a Motion to Join Derivative Lawsuit Against Morgans Hotel Group

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By Business Wirevia The Motley Fool

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OTK Associates Files a Motion to Join Derivative Lawsuit Against Morgans Hotel Group

Alleges that Company’s Recapitalization Plan is Invalid Under Delaware Law and Board Actions Disenfranchise Stockholders and Entrench Management

NEW YORK–(BUSINESS WIRE)– OTK Associates LLC, the largest stockholder of Morgans Hotel Group Co. (NAS: MHGC) with 13.9% of the outstanding common stock of the company, today disclosed that it has filed a motion to join a derivative lawsuit filed in Delaware Chancery Court to stop a self-serving recapitalization that the company is rushing to consummate in advance of a stockholder meeting initially scheduled for May 15, 2013.

OTK Associates also issued the following letter to MHGC stockholders:

April 5, 2013

Dear Fellow Stockholders,

We are writing to inform you that we have filed a motion to join the recently filed derivative lawsuit against Morgans Hotel Group that seeks to stop a series of transactions with the Yucaipa Companies which the company’s directors are rushing to consummate. The board’s actions are invalid under applicable Delaware law, and will further disenfranchise stockholders while thoroughly entrenching the current board and management.

As the company’s largest stockholder, we are deeply concerned by actions of this nature deliberately undertaken during an ongoing proxy process. The board’s move to effectuate a coercively dilutive recapitalization is an obvious attempt to place a large block of stock in friendly hands prior to the annual meeting in order to preserve the positions of its incumbent directors and avoid review of the transaction by a truly independent board.

Similarly, the board’s retroactive decision to postpone the previously scheduled annual meeting to July 10, 2013 from May 15, 2013, and to reset the meeting’s record date to May 29, 2013 from March 22, 2013, serves only to ensure stockholders will be denied the benefit of reviewing the transaction. Existing stockholders of record will effectively lose their right to cast votes at the May 15th meeting, where we believe the company’s incumbent directors would likely be replaced by OTK‘s proposed nominees. This attempt to both rig an election and defend a self-dealing transaction will further burn the funds of a company already operating at a loss.

To preserve stockholders’ rights and the integrity of the corporate decision-making process we are seeking the following:

Business, Finance, Occupation & Industry

Here's How Morgans Hotel Group May Be Failing You

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By Seth Jayson, The Motley Fool

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Margins matter. The more Morgans Hotel Group (NAS: MHGC) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That’s why we check up on margins at least once a quarter in this series. I’m looking for the absolute numbers, so I can compare them to current and potential competitors, and any trend that may tell me how strong Morgans Hotel Group‘s competitive position could be.

Here’s the current margin snapshot for Morgans Hotel Group over the trailing 12 months: Gross margin is 56.5%, while operating margin is -3.8% and net margin is -29.3%.

Unfortunately, a look at the most recent numbers doesn’t tell us much about where Morgans Hotel Group has been, or where it’s going. A company with rising gross and operating margins often fuels its growth by increasing demand for its products. If it sells more units while keeping costs in check, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can’t make up for this problem by cutting costs — and most companies can’t — then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company’s profitability. That’s why I like to look at five fiscal years’ worth of margins, along with the results for the trailing 12 months, the last fiscal year, and last fiscal quarter (LFQ). You can’t always reach a hard conclusion about your company’s health, but you can better understand what to expect, and what to watch.

Here’s the margin picture for Morgans Hotel Group over the past few years.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of seasonality in some businesses, the numbers for the last period on the right — the TTM figures — aren’t always comparable to the FY results preceding them. To compare quarterly margins to their prior-year levels, consult this chart.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

Here’s how the stats break down:

  • Over the past five years, gross margin peaked at 59.7% and averaged 55.6%. Operating margin peaked at 13.8% and averaged -0.5%. Net margin peaked at -18.8% and averaged -33.6%.
  • TTM gross margin is 56.5%, 90 basis points better than the five-year average. TTM operating margin …read more
    Source: FULL ARTICLE at DailyFinance
Business, Finance, Occupation & Industry

OTK Associates to Nominate Directors to Morgans Hotel Board

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By Business Wirevia The Motley Fool

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OTK Associates to Nominate Directors to Morgans Hotel Board

NEW YORK–(BUSINESS WIRE)– OTK Associates LLC, the largest shareholder of Morgans Hotel Group Co. (NAS: MHGC) with 13.9% of the outstanding common stock of the company, today disclosed that it intends to nominate a slate of seven candidates to the company’s board of directors and notified the company of its intent in a letter on March 15, 2013. Morgans’ 2013 Annual Meeting of Shareholders is scheduled to be held on May 15, 2013.

OTK Associates also disclosed a letter to MHGC shareholders outlining why it believes a reconfiguration of the Board is urgently needed. The full text of the letter follows:

March 18, 2013

Dear Fellow Stockholders,

We are writing to inform you that on Friday, March 15, OTK Associates, LLC delivered notice to Morgans Hotel Group of its intent to nominate seven qualified candidates to the company’s board of directors at the upcoming annual meeting of stockholders on May 15, 2013.

As the company’s largest stockholder, with a 13.9% ownership stake or 4,500,000 common shares of Morgans, we are seeking your support to elect directors that have the skills and experience necessary to either grow the business and return the company to profitability or to appropriately evaluate and pursue strategic alternatives in a disinterested fashion. We are nominating a slate of directors that brings significant lodging industry expertise, capital markets experience and superior hotel operating acumen. We strongly believe that a reconfigured board is a prerequisite for improving the company’s financial performance and competitive position, and for harvesting additional value from its existing asset base.

OTK is a partnership between families that have a demonstrated track record of creating value in the real estate and lodging industries. OTK acquired its position in Morgans more than five years ago and has not sold any shares since that time. During this period, OTK has observed as various management teams and board members squandered resources and failed to capitalize on the extraordinary brand value of the company. OTK believes that new leadership is urgently needed to protect the interests of common stockholders and maximize stockholder value going forward, and we believe the majority of Morgans’ common stockholders will agree.


Need for Alignment of Interests:

…read more
Source: FULL ARTICLE at DailyFinance