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Morgans Hotel gains ability to call trust preferreds with amendment
By Angela McDaniels
Tacoma, Wash., Nov. 2 - Morgans Hotel Group Co. said it secured an amendment to the indenture governing its $50 million of trust preferred securities due 2036 to permanently eliminate the EBITDA-to-interest coverage ratio covenant, which was the sole financial covenant.
The trust preferreds are callable at par at any time as a result of the amendment, according to a company news release.
In exchange for the permanent removal of the covenant, Morgans paid a one-time fee of $2 million.
The company issued the trust preferreds in a private placement in August 2006. They have a fixed interest rate of 8.68% for the first 10 years and then a floating interest rate of Libor plus 325 basis points.
Morgans Hotel Group is a New York-based hospitality company.
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