Morgans Hotel accepts tenders for 99.4% of Hard Rock's 8 7/8% notes

By Laura Lutz

Washington, Feb. 5 - Morgans Hotel Group Co. said its subsidiary, MHG HR Acquisition Corp., settled its tender offer for Hard Rock Hotel, Inc.'s $140 million 8 7/8% second-lien notes due 2013.

The company purchased $139 million principal amount, or 99.4%, of the notes in the offer, which ended at 8 a.m. ET on Feb. 2.

The company had received tenders for the same amount of notes by Feb. 1. The company began the tender offer and a consent solicitation for the notes on Dec. 12.

The company paid $1,084.48 for each $1,000 principal amount of notes tendered plus accrued interest. The tender consideration included a $30.00 consent payment for noteholders who tendered before midnight ET on Dec. 26, the consent deadline.

The tender consideration was determined on Jan. 16 and is equal to the sum of the present value on the payment date of $1,044.38 - the redemption price on June 1, 2008, the earliest redemption date - and the remaining scheduled interest payments to the redemption date, based on the yield of the 5 5/8% U.S. Treasury due May 15, 2008 plus 50 basis points, minus accrued interest.

The pricing was delayed from Jan. 12, Jan. 9 and Dec. 27 after the company pushed back the tender offer expiration from Jan. 11. The deadline has since been extended from Jan. 24, Jan. 29, Jan. 30 and Feb. 1.

The company was soliciting consents for amendments to the note indenture that would eliminate substantially all of the restrictive covenants, eliminate or modify some conditions to defeasance of the notes and some events of default and eliminate the right of holders to have their notes repurchased in the event of a change of control.

Holders who tendered were required to submit consents.

Settlement of the offer depended on conditions including the completion of a merger between Morgans and Hard Rock and the receipt of sufficient funding.

Previously, Morgans said it planned to finance the offer with borrowings under a real estate credit facility or an interim credit facility in connection with the merger and with cash equity from the merger.

Credit Suisse (800 820-1653 or collect 212 325-7596) is dealer manager, and D.F. King & Co., Inc. (800 769-7666 or 212 269-5550) is the information agent.

Morgans is based in New York and owns and operates boutique hotels.

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