Dec 16 (Reuters) - A top Morgans Hotel Group Co shareholder is preparing to launch a proxy fight, according to documents obtained by Reuters, as it lines up three candidates to serve on the company’s board of directors.
The battle brewing inside the upscale hotel company comes after two failed deals, one involving Yucaipa Companies billionaire Ronald Burkle and the other with Los Angeles hotelier Sam Nazarian.
Rambleside Holdings, an investment firm that owns a roughly 4 percent stake in Morgans, has filed a formal request for the company’s list of shareholders, according to a Dec. 15 letter obtained by Reuters. Such a letter - pursuant to section 220 of Delaware Corporate Law - is typically the first step in a proxy contest, allowing a shareholder to canvas fellow owners for support.
The request follows a letter Rambleside sent last month to the company’s board, which says that it has shareholder support to have Rambleside Chief Executive Officer Greg Cohen on the board and three other candidates: ex Morgans CEO Fred Kleisner; ex-KKR executive Nils Brous; and John Tolbert, a consultant who used to work for billionaire and Blockbuster Video founder, Wayne Huizenga.
“Inviting these highly qualified individuals onto the Board will help assure the investor community about the Board’s seriousness of maximizing shareholder value,” says the letter, dated Nov. 5.
According to a person familiar with the matter, Morgans has not responded to the Nov. 5 letter, leading Rambleside to begin the process of a proxy fight for the hotel group’s annual meeting, which has yet to be scheduled.
The two sides could still reach an agreement before the annual meeting and avoid a fight.
Morgans, which has a market value of around $100 million and whose boutique hotel brands include Hudson and Mondrian, did not immediately return a call for comment.
Morgans’ properties include the Delano on Miami Beach as well as other prize properties in London, New York in other gateway cities.
Last week, France’s AccorHotels said it would buy FRHI Holdings Ltd, parent of the Fairmont, Raffles and Swissotel chains in a cash-and-share deal worth $2.9 billion that will also raise the U.S. profile of Europe’s largest hotel group. (Reporting by Michael Flaherty in New York; Editing by Bernard Orr)
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