NEW YORK-The deal that would allow billionaire Ron Burkle's Yucaipa Cos. to swap $230 million in notes and preferred stock to acquire Morgans Hotel Group's Delano South Beach Hotel in Miami and a restaurant concern was blocked by a court ruling on Tuesday.
The deal also would have allowed Morgans Hotel Group to launch a $100-million recapitalization plan.
Delaware Chancery Court Judge Travis Laster ruled that the process undertaken by Morgans Hotel Group Co.'s board of directors was flawed, according to Bloomberg News Service.
“These were transactions that had major consequences for the company and involved the sale of its crown jewel,” Laster said in a conference call with attorneys for the company, Burkle and a dissident Morgans director who sued to challenge the deal.
Morgans officials have rescheduled the company's annual meeting for June 14 in the wake of Judge Laster's ruling. See story at Bloomberg.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
