Morgans HotelGroup Co. is still in discussions with a potential acquirer thatemerged in late Juneand is working to sign a nondisclosure agreement with another suitor.
Morgans has already agreed to be by SBE for $2.25 per share.When it announced that deal in May, Morgans said it expected the transaction toclose in the third or fourth quarter of the year.
In a proxy filing, the company said the first unnamed buyer,known as "Bidder U," sought and was granted waivers to engage indiscussions with its board, with Morgans shareholder OTK Associates and withMorgans debt holder Yucaipa Cos.
Meanwhile, on July 18, the company received an unsolicitedproposal to acquire its common stock for an all-cash purchase price of $2.75per share, from an unnamed party known as "Bidder V."
Bidder V said it anticipated redeeming the company's seriesA preferred securities at their liquidation value plus accrued distributions andwas committed to work to assume or refinance the company's mortgage debt. Thebidder also indicated that it intended to finance the acquisition entirely withequity and enclosed a nonbinding letter of intent from a financial institutionexpressing an agreement in principle to provide up to $250 million in equityfinancing to support the transaction.
The Morgans board — excluding Bradford Nugent and HowardLorber, who recused themselves — decided to engage in discussions with BidderV, having determined that the proposal would reasonably be expected to lead toa "Superior Monroe Proposal" within the meaning of the mergeragreement.
The two parties' attorneys were in the process of finalizinga nondisclosure agreement as of the proxy's July 26 filing date.