Morgans Hotel Group Co. (NASDAQ: MHGC) ("MHG"), a fully
integrated hospitality company that operates boutique hotels in
gateway cities under well-known brands such as Delano, Mondrian and
Hudson, today announced the issuance of $50 million in trust preferred
securities in a private placement through a newly-established trust
subsidiary, MHG Capital Trust I. The securities have a 30-year
maturity and are redeemable by the Company after five years at par.
They bear interest of a fixed rate of 8.68% until October 2016 and
thereafter will bear interest at a floating rate based on LIBOR plus
3.25%.
W. Edward Scheetz, President and Chief Executive Officer of MHG, said, "The issuance of trust preferred securities will provide Morgans Hotel Group with additional financial flexibility. With a long term fixed rate, a call option after five years and a 30 year maturity, it's an excellent source of flexible and attractive capital that is less expensive than equity and not dilutive to our shareholders. As a newly public company, we are pleased to be able to take advantage of this new financing to fund our growth."
Net proceeds from the issuance of the trust preferred securities will be used by the Company to pay down the Company's existing credit line and provide the Company with financing for development and other corporate activities.
About Morgans Hotel Group
Morgans Hotel Group Co. (NASDAQ: MHGC) which is widely credited with establishing and developing the rapidly expanding boutique hotel sector, owns and operates Morgans, Royalton and Hudson in New York, Delano and The Shore Club in Miami, Mondrian in Los Angeles and Scottsdale, Clift in San Francisco, and Sanderson and St Martins Lane in London. MHG has other property transactions in various stages of completion including projects in Miami Beach, Florida, and Las Vegas, Nevada, and continues to vigorously pursue its strategy of developing unique properties at various price points in international gateway cities in the United States, Europe, South America, Asia and around the world. For more information please visit www.morganshotelgroup.com.
Forward-Looking and Cautionary Statements
Statements contained in this press release which are not historical facts are forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "projects," "intends," "believes," "guidance," and similar expressions that do not relate to historical matters. These forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors which include, but are not limited to, downturns in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; risks related to natural disasters, such as earthquakes and hurricanes; the completion of transactions and the integration of properties with our existing business; the seasonal nature of the hospitality business; changes in the tastes of our customers; increases in real property tax rates; increases in interest rates and operating costs; general volatility of the capital markets and our ability to access the capital markets; and changes in the competitive environment in our industry and the markets where we invest, and other risk factors discussed in Morgans Hotel Group Co.'s Annual Report on Form 10-K and other documents filed by the Company with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are made as of today, 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.
W. Edward Scheetz, President and Chief Executive Officer of MHG, said, "The issuance of trust preferred securities will provide Morgans Hotel Group with additional financial flexibility. With a long term fixed rate, a call option after five years and a 30 year maturity, it's an excellent source of flexible and attractive capital that is less expensive than equity and not dilutive to our shareholders. As a newly public company, we are pleased to be able to take advantage of this new financing to fund our growth."
Net proceeds from the issuance of the trust preferred securities will be used by the Company to pay down the Company's existing credit line and provide the Company with financing for development and other corporate activities.
About Morgans Hotel Group
Morgans Hotel Group Co. (NASDAQ: MHGC) which is widely credited with establishing and developing the rapidly expanding boutique hotel sector, owns and operates Morgans, Royalton and Hudson in New York, Delano and The Shore Club in Miami, Mondrian in Los Angeles and Scottsdale, Clift in San Francisco, and Sanderson and St Martins Lane in London. MHG has other property transactions in various stages of completion including projects in Miami Beach, Florida, and Las Vegas, Nevada, and continues to vigorously pursue its strategy of developing unique properties at various price points in international gateway cities in the United States, Europe, South America, Asia and around the world. For more information please visit www.morganshotelgroup.com.
Forward-Looking and Cautionary Statements
Statements contained in this press release which are not historical facts are forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "projects," "intends," "believes," "guidance," and similar expressions that do not relate to historical matters. These forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors which include, but are not limited to, downturns in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; risks related to natural disasters, such as earthquakes and hurricanes; the completion of transactions and the integration of properties with our existing business; the seasonal nature of the hospitality business; changes in the tastes of our customers; increases in real property tax rates; increases in interest rates and operating costs; general volatility of the capital markets and our ability to access the capital markets; and changes in the competitive environment in our industry and the markets where we invest, and other risk factors discussed in Morgans Hotel Group Co.'s Annual Report on Form 10-K and other documents filed by the Company with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are made as of today, 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.