By Devika Patel
Knoxville, Tenn., Oct. 15 - Morgans Hotel Group Co. said it raised $75 million in a private placement of its preferred securities with the Yucaipa Cos., LLC.
The preferreds have an 8% dividend rate for the first five years; a 10% rate for years six and seven; and for any remaining balances, a 20% rate for the years thereafter. The company may redeem the preferreds at any time without any pre-payment penalty.
In addition, Yucaipa received a warrant for 12.5 million common shares, which is exercisable at $6.00 for 7.5 years.
Proceeds will significantly strengthen the company's balance sheet and provide long-term financing for growth.
The hospitality company is based in New York.
| Issuer: | Morgans Hotel Group Co.
|
| Issue: | Preferred securities
|
| Amount: | $75 million
|
| Dividends: | 8% in first five years, 10% for years six to seven; 20% thereafter
|
| Warrants: | For 12.5 million shares
|
| Warrant expiration: | 7.5 years
|
| Warrant strike price: | $6.00
|
| Investor: | The Yucaipa Cos., LLC
|
| Settlement date: | Oct. 15
|
| Stock symbol: | Nasdaq: MHGC
|
| Stock price: | $5.51 at close Oct. 14
|
| Market capitalization: | $165 million
|
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