Leading investors in Morgans Hotel Group Co. are demanding again that the underperforming company be sold.
After the company announced Tuesday that CEO Michael Gross had resigned, Bloomberg reported that billionaire investor Ron Burkle insisted in a letter to new interim CEO Jason Kalisman that the company be put on the market and sold to an appropriate buyer for stockholders? benefit. Kalisman is the founder of OTK Associates, Morgans largest shareholder with about 14% of its shares, which led an ouster of the company?s board in June.
Burkle, who said his Yucaipa Cos. has more than US$200 million of Morgans debt and warrants for about 30% of the company?s stock, demanded the right to be informed of discussions on ?refinancings, new CEOs, terminated CEOs and like matters.?
?I believe you are in breach of your obligation to provide us with observation rights,? Burkle wrote in the letter, dated August 30 and filed yesterday with the U.S. Securities and Exchange Commission. ?The entire incident with Michael Gross is a great example of not keeping the board informed or board observers informed of what?s going on.?