Bloomberg the Company & Products

Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Morgans Hotel Investor Seeks to Join Suit Over Yucaipa

Don't Miss Out —
Follow us on:

April 5 (Bloomberg) -- Morgans Hotel Group Co. today agreed to postpone a $6-a-share rights offering until at least May 16, while dissident investors seek to block a recapitalization plan with billionaire Ron Burkle’s Yucaipa Cos., court papers show.

OTK Associates LLC, Morgans’s largest shareholder, yesterday asked a Delaware Chancery Court judge for permission to join a lawsuit challenging the board’s approval of the plan.

OTK, owner of 13.9 percent of Morgans’s outstanding common shares, said the vote was designed to dilute its stake and disrupt a proxy contest the firm was pursuing.

Jason Taubman Kalisman, a Morgans director and co-founder of OTK, alleged in a complaint unsealed this week that the vote was invalid because inadequate notice was given of a March 30 directors’ committee meeting.

“OTK seeks to protect its interests, and the interests of all Morgans’ stockholders in meaningful exercise of its voting rights, and to prosecute certain board members for their breaches of fiduciary duty,” OTK said in a filing yesterday in Delaware Chancery Court in Wilmington.

OTK said in March that it planned to nominate seven directors to the boutique-hotel operator’s board. OTK accused the current board of engaging in self-serving deals.

Swap Interests

Morgans, based in New York, said April 1 that Los Angeles-based Yucaipa will swap interests in the company’s convertible notes and preferred stock for its ownership in the Delano South Beach hotel in Miami Beach, Florida, and the Light Group.

Yucaipa will also backstop the $100 million, $6-a-share rights offering available to shareholders with no fees if the rights aren’t fully exercised, Morgans said.

OTK and Kalisman accused Morgans’s directors of rushing to complete the deal before a stockholders meeting initially scheduled for May 15 and now scheduled for July 10.

In a filing today, Morgan lawyer Raymond DiCamillo asked Chancery Judge J. Travis Laster to schedule a hearing on a preliminary injunction before May 15.

The case is Kalisman v. Friedman, 8447, Delaware Chancery Court (Wilmington).

To contact the reporters on this story: Sophia Pearson in Philadelphia at; Phil Milford in Wilmington, Delaware, at

To contact the editor responsible for this story: Michael Hytha at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.