Morgans Hotel Group Said to Be Close to a Merger With SBE

McCaysville GA – August 9, 2015 (hospitalitybusinessnews.com) According to a report by Bloomberg, Morgans Hotel Group and SBE appear to be close to a merger.

On May 13, 2015,  Jason T. Kalisman, Morgans’ Chairman of the Board, stated: “As fiduciaries, Morgans’ Board is committed to maximizing value for our stockholders and, as we have consistently stated, the Board is constantly exploring all opportunities to do what is right for all stockholders.  This has always included evaluating transactions as large as a potential sale or merger – but undertaken from a position of strength and flexibility. The engagement of Morgan Stanley to assist the committee in its strategic review allows the committee to draw on the insight and experience of a leading investment bank. Our stockholders have voiced their desire to know where the Board stands on these issues, and thus we felt it appropriate to share the fact that we had already taken the step of retaining advisors as we undergo the strategic review process.” The full announcement was reported in an article in Hospitality Business News .

Bloomberg stated “The deal may be completed as early as this month, said one of the people, who asked not to be identified because negotiations are continuing. Nazarian, founder and chief executive officer of SBE, would lead the combined company and SBE would be its majority owner, the person said.”

SBE currently operates 6 hotels in Los Angles, Las Vegas, and Miami. Morgans has 13 hotels. Nine in the USA and 3 in the UK and 1 in Istanbul.

In a strange turn of events, Morgans Hotel Group was scheduled to open a Mondarin hotel in the Bahamas, as part of the Baha Mar project. In April of 2014 Morgans pulled out of the deal over a dispute over the management agreement.

According to a report “under the terms of the management agreement, Baha Mar was required to obtain a nondisturbance agreement from lenders subordinating Morgans’ interest in the hotel to the interest of the hotel’s lenders. In exchange, the lenders would agree not to interfere legally with any of Morgans’ rights under the HMA, the complaint said. In other words Morgans could not be kicked out if the hotel went bankrupt.”

After Morgans pulled out, SBE came in and took over the property. It is not known is their management agreement included what Morgans was looking for.

In June of 2015 Baha Mar filed for bankruptcy protection. It is unclear whether SBE’s Bahamas property will ever open.

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