Morgans Hotel Group Co. (MHGC) investors elected seven of the nine board members proposed by the New York-based company and two nominated by stakeholder Kerrisdale Capital Management LLC, according to preliminary results.
The board members elected include Marty Edelman, Michelle Russo and Derex Walker, Morgans Chairman Jason Kalisman said today in a statement. John Brecker and Andrew Broad, nominated by Kerrisdale in March, were also chosen, Morgans said.
Kerrisdale and Ron Burkle’s Yucaipa Cos., an investor in Morgans through holdings of preferred stock, notes and warrants, have been lobbying to overturn the current board and have pushed for a sale of the company. In March, Kerrisdale proposed a new slate of candidates who are “committed to exploring strategic alternatives in a robust and transparent manner.”
Kalisman said today that “we have received constructive feedback from our stockholders, and our board looks forward to continuing that open dialogue.”
Proxy advisory firm Glass Lewis & Co. earlier this month recommended that investors vote for Brecker and Broad. Morgans, which operates boutique hotels including the Mondrian in Los Angeles and the Delano in Miami’s South Beach, has lost money each quarter since 2007, according to data compiled by Bloomberg.
In October, Burkle sent a letter to the Morgans board “expressing a desire to make a proposal to the board to purchase the company for $8 per share.” Yucaipa also encouraged Morgans to seek other bids to see if a higher price “can be obtained.”
Morgans has hired Morgan Stanley to help explore strategic alternatives, including a sale, according to a statement yesterday. Earlier this year, the company said it would cut jobs, resulting in about $8 million of annual savings.
Morgans fell 3.2 percent to $7.81 today. The stock has gained 4.6 percent since last year’s board election, on June 14.
Sahm Adrangi, Kerrisdale’s chief investment officer, declined to comment until final election results are available.
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