Morgans Hotel once more prolongs tender for Hard Rock Hotel's 8 7/8% notes

By Jennifer Chiou

New York, Jan. 12 - Morgans Hotel Group Co. announced that its wholly owned subsidiary MHG HR Acquisition Corp. has once more extended the tender offer for Hard Rock Hotel, Inc.'s $140 million of 8 7/8% second-lien notes due 2013.

The offer will now expire at 5 p.m. ET on Jan. 30, pushed back from Jan. 29, Jan. 24 and Jan. 11. It began on Dec. 12.

As of 5 p.m. ET on Jan. 11, the company received tenders from holders of $139 million or 99.4% of the notes, unchanged from the early deadline on Dec. 27.

The company is soliciting consents for amendments to the note indenture that would eliminate substantially all of the restrictive covenants, eliminate or modify some conditions to defeasance of the notes and some events of default and eliminate the right of holders to have their notes repurchased in the event of a change in control. It added that a supplemental indenture will be executed promptly.

For each $1,000 principal amount of notes, the company will pay an amount equal to the sum of the present value on the payment date of $1,044.38 - the redemption price on June 1, 2008, the earliest redemption date - and the remaining scheduled interest payments to the redemption date, based on the yield of the 5 5/8% U.S. Treasury due May 15, 2008 plus 50 basis points, minus accrued interest.

Pricing will now be determined at 10 a.m. ET on Jan. 16, delayed from Jan. 12, Jan. 9 and Dec. 27.

The total consideration includes a $30.00 consent payment for each $1,000 principal amount of notes tendered before the consent deadline at midnight ET on Dec. 26. Notes tendered after that time will receive the same amount, less the consent fee.

The company will also pay accrued interest for the notes.

Holders who tender are required to submit consents. Tenders may not be withdrawn after the consent deadline except in limited circumstances.

The proposed amendments will not become effective until the company has accepted tenders from holders of a majority of the notes.

Settlement of the offer depends on conditions including the completion of a merger between Morgans and Hard Rock, the receipt of sufficient funding, and the receipt of consents from holders of a majority of the notes.

Morgans intends to finance the offer with borrowings under a real estate credit facility or an interim credit facility in connection with the merger and with cash equity from the merger.

Credit Suisse (800 820-1653 or collect 212 325-7596) will act as dealer manager. D.F. King & Co., Inc. (800 769-7666 or 212 269-5550) is the information agent.

New York-based Morgans owns and operates boutique hotels.

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