OTK Associates LLC, the largest shareholder of Morgans Hotel Group Co. (Nasdaq: 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:
Restoring Financial Performance:
Opportunity to Improve Management and Board Oversight:
The decision to nominate a new slate of board members has not been taken lightly. After five years of observation, OTK views it impossible, based on the company's performance over time, to effect sweeping and necessary change without replacing substantially all of the current board. The slate we are proposing has been constructed to refocus the company on its core business, extend its collection of world recognized brands and to right-size its operating cost structure. Members of this slate possess the specific industry experience, financial sophistication and operating relationships to assist the company moving forward.
Morgans Hotel Group has been a leading name in luxury boutique hotels, and can be again with proper oversight and leadership. We ask for your support in electing directors committed to stabilizing the company and maximizing its value.
If you have questions, we urge you to call our proxy solicitors, Okapi Partners LLC, toll-free at (877) 869-0171. You may also email questions to email@example.com
/s/ OTK Associates, LLC
OTK Associates, LLC
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 2 TO THE SCHEDULE 14A FILED PURSUANT TO RULE 14A-12 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY OTK ASSOCIATES, LLC ON MARCH 15, 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.