Burkle won’t close Morgans deal by deadline: report

Mystery bidder eyeing boutique hotel company as $800M deal lingers

TRD New York /
Nov.November 09, 2016 01:06 PM
The Hudson Hotel at 356 Eest 58th street,

The Hudson Hotel at 356 East 58th Street (inset: Ron Burkle)

UPDATED, 2:30 p.m., Oct. 9: Billionaire investor Ron Burkle is not expected to finalize his $800 million buyout of the Morgans Hotel Group before the Wednesday deadline for his merger agreement expires.

Burkle, along with Sam Nazarian’s SBE Entertainment, had six months to close the deal they signed an agreement on May 9 to buy the company for $2.25 a share, or about $800 million.

But the prospective buyers won’t close the deal by Wednesday’s deadline, the New York Post reported, and a rival bidder is planning to make a run at the company, which owns hotels such as the Hudson in Columbus Circle and Miami’s Delano South Beach. Burkle and Morgans did, however, extend the deadline to Nov. 30, according to filings with the Securities and Exchange Commission.

Morgans is thin on cash and needs to lock down a buyer or financing by the end of the year, the newspaper reported.

Burkle’s stake in the boutique hotel firm dates back to 2009, when is firm Yucaipa Cos. Lent $75 million to the struggling company amid the financial crisis.

Morgans apparently doesn’t have a way to pay the loan back, and the dividend on Burkle’s preferred shares are paying 20 percent interest – a figure that doubles to 20 percent on Oct. 18.

Burkle also holds the right to block major asset sales via warrants that can be exercised at $6 a share. A rival bidder would have to fork over roughly $135 million to retire his preferred stock. [NYP]Rich Bockmann


Related Articles

arrow_forward_ios
30 West 31st Street and 52 West 36th Street (Credit: Google Maps)

South Korean firm snaps up two Midtown hotels for $137M

Brookfield Property Group CEO Brian Kingston and 652 11th Avenue (Credit: Google Maps)

Brookfield drops $83M on Hell’s Kitchen hotel

Mensur Cekic, Hudson Yards’ director of residences

From private tutors to meditation sessions, inside NYC’s new amenities battle

Lightstone Group CEO David Lichtenstein and Moxy Chelsea at 105 W 28th Street (Credit: Lightstone and Facebook)

Lightstone gave its neighbors $7M to build a hotel. Then the neighbors secretly went to war, suit claims.

Here are the numbers behind Michael Dell’s record purchase of the Boca Raton Resort

Long Island’s hotel market could be headed for a downturn

This obscure Caribbean island is a favorite among the super wealthy

Manhattan hotel at center of 1MDB fraud case lands $615M refinancing

arrow_forward_ios