Morgans Hotel Group Lands Loans

Morgans Hotel Group has inked a $205 million refinancing deal with four lead banks.

  • 24 Feb 2006
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Morgans Hotel Group has inked a $205 million refinancing deal with four lead banks. Bank of America, Citigroup, Merrill Lynch and Morgan Stanley launched syndication of the deal Feb. 17, shopping a three-year, $80 million term loan and a three-year, $125 million revolver. Both tranches are priced at LIBOR plus 2%, one investor said.

The transaction will be used by Morgans Hotel Group for its day-to-day company operations, to refinance its debt and to potentially fund several pending acquisitions. These acquisitions include a $14.3 million property acquisition in Miami Beach, Fla., the purchase of the 194 room James Hotel Scottsdale in Scottsdale, Ariz., and a venture with Boyd Gaming Corp. to develop two hotels in Las Vegas.

"This has been a very aggressive time for them," the investor said of the hotel company. "They operate several well-known hotel brands and with these forthcoming additions, they are really progressing in their growth plans." If all proposed acquisitions go through, Morgans will close to double the amount of hotel rooms it currently operates.

The syndication of the facility follows the company's initial public offering on Feb. 14. Morgans made 18 million shares available, priced at $20 each. After the first day of trading, the shares dropped slightly to $19.89. Due to strong demand, the offering was increased twice in February, first to $350 million from $300 million and then to $425 million.

Based in New York, Morgans owns and operates several hotel brands throughout the U.S. and the U.K. These brands include the Hudson, Morgans and the Royalton in New York; the Delano in Miami; the Mondrian in Los Angeles; the Clift in San Francisco and Sanderson and St. Martins Lane in London. Morgans also operates Miami's The Shore Club.

Calls to Morgans were not returned. Bankers at Citigroup, Merrill Lynch and Morgan Stanley did not return calls. Bankers at B of A declined comment.

  • 24 Feb 2006

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