Morgans Hotel prices tender consideration for Hard Rock's 8 7/8% notes

By Angela McDaniels

Seattle, Jan. 17 - Morgans Hotel Group Co. said its subsidiary MHG HR Acquisition Corp. will pay $1,084.48 for each $1,000 principal amount of Hard Rock Hotel, Inc.'s $140 million 8 7/8% second-lien notes due 2013 tendered plus accrued interest up to but excluding the settlement date.

The company began a tender offer and consent solicitation for the notes on Dec. 12.

The tender consideration includes a consent payment of $30.00 for noteholders who tendered and submitted consents before midnight ET on Dec. 26, the consent deadline. Noteholders who tendered after that time will receive $1,054.48 per $1,000 principal amount of notes plus accrued interest.

The tender consideration was determined on Jan. 16 and is 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.

The pricing was delayed from Jan. 12, Jan. 9 and Dec. 27 after the company pushed back the tender offer expiration to 5 p.m. ET on Jan. 30 from Jan. 29, Jan. 24 and Jan. 11.

As of Jan. 16, the company had received tenders and consents 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 of control.

Holders who tender are required to submit consents.

Settlement of the offer depends on conditions including the completion of a merger between Morgans and Hard Rock and the receipt of sufficient funding.

Previously, Morgans said it plans 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) is dealer manager, and D.F. King & Co., Inc. (800 769-7666 or 212 269-5550) is the information agent.

Morgans is based in New York and owns and operates boutique hotels.

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