Crains New York - July 8, 2013 - (Page 4)

IN THE MARKETS by Aaron Elstein buck ennis NO ROOM FOR ERROR: Morgans Hotel Group CEO Michael Gross recently described his new board’s majority as “unfit” to govern. It’s check-out time at Morgans hotels M Make Way for the Mega Docs CRAIN’S Health Care Symposium: Two competitive strategies and the impact on New York’s health care industry. Multi-Specialty Suburban Practices DATE: Wednesday July 17, 2013 VS. PLACE: Essex House New York 160 Central Park South NYC Hospitals, One-Stop Patient Experience TIME: 8:00 am – 12:00 pm OPENING KEYNOTE: Ann Huston, Chief Strategy Officer, Cleveland Clinic PANEL DISCUSSIONS Mega Practices: A New Era of Health Care Scott Hayworth, M.D. FACOG President and CEO, Mount Kisco Medical Group Walter LeStrange COO, ProHEALTH Care Associates Simeon Schwartz, M.D. President and CEO, WESTMED Medical Group Hal Teitelbaum, M.D., J.D., M.B.A. Managing Partner and CEO, Crystal Run Healthcare A View From Inside: The CFO Perspective Joseph Guarracino SVP and CFO, The Brooklyn Hospital Center Joel Perlman EVP and CFO, Montefiore Medical Center Donald Scanlon EVP and CFO, The Mount Sinai Medical Center Robert Shapiro, CPA EVP and CFO, North Shore-LIJ 4 | Crain’s New York Business | July 8, 2013 COST TO ATTEND: $300 for individual ticket(s) $3,000 for table(s) of ten You must be pre-registered to attend this event. No refunds permitted. For more information, please contact the Events Hotline at (212) 210-0739 or crainsevents@crainsnewyork.com. For sponsorship information, please contact Nancy Adler at (212) 210-0278 or nadler@crainsnewyork.com. Platinum Sponsor: Silver Sponsors: Supporting Sponsor: organs Hotel Group owns or manages some of the city’s swankiest hotels, including the Royalton in midtown and the Mondrian in SoHo. Still, Morgans hasn’t made a dime of profit since the spring of 2008—and with nine competitors interested in buying the company, “now is the time [for management] to sell,” as Credit Suisse analysts not-so-gently put it recently. Even Chief Executive Michael Gross agrees, telling investors in early June that a sale is “the right thing to do.” So what’s the hang-up? For starters, virtually all of the luxury hotelier’s directors recently got fired by shareholders. The bloodbath stems from a battle between private-equity investor and friend-of-Bill-Clinton Ron Burkle and the family of Alfred Taubman, the former Sotheby’s chairman and mall developer. Mr. Burkle’s Yucaipa Cos. is Morgans’largest creditor thanks to a preferred stake acquired in 2009, when the company founded by Ian Schrager and Steve Rubell was struggling to get through the recession. OTK Associates, an investment firm controlled in part by the Taubmans, is Morgans’ largest common shareholder, with a 14% stake. The Burkle investment puts Morgans on the hook for millions in dividend payments that it can ill afford. Even worse, those obligations are poised to increase in the coming years. So the hotelier this year proposed to sell new shares and offer Yucaipa control of the nightclub and food and beverage business at its Delano Hotel in Miami’s South Beach. OTK sued, arguing it made no sense to part with valuable corporate assets and dilute the stakes of existing stockholders. It then upped the ante by trying to replace most of Morgans’ board. The gambit worked. Eight of the nine directors were voted out June 14. OTK nominees replaced them. What happens next? OTK has said it will pursue “strategic alternatives,” which means it agrees that selling the company is a good idea. Morgans clearly has some very posh properties, but some, like the Hudson Hotel near Columbus Circle, have become “an afterthought for the hip crowd,” according to Credit Suisse, as scene-seekers migrate to boutique hotels on the Lower East Side or in the meatpacking district. The new board is sure to order senior management to check out, as Mr.Gross (a Crain’s 40 Under 40 this year) had called the OTK nominees “unfit to act as an effective board and incapable of representing the interests of all shareholders.” While a spokesman said management is working closely with the newly installed directors, it’s hard to imagine they’ll leave the light on for Mr. Gross. Ⅲ THE AMOUNT THAT FLED U.S.-listed bond mutual funds and exchange-traded funds in June, according to TrimTabs Investment Research. The exodus, spurred by concerns that the Federal Reserve will taper its bond-buying stimulus, trumped the previous monthly record of $41.8 billion, in October 2008. $79.8B http://www.bestplacestoworknyc.com http://www.bestplacestoworknyc.com

Table of Contents for the Digital Edition of Crains New York - July 8, 2013

Crains New York - July 8, 2013
IN THE MARKETS
BUSINESS PEOPLE
SMALL BUSINESS
INSIDER
REAL ESTATE DEALS
OPINION
GREG DAVID
NICOLE GLAROS
IN THE BOROUGHS
TOURISM REPORT
CLASSIFIEDS
FOR THE RECORD
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - July 8, 2013