Shareholders at Morgans Hotel Group, the boutique hotelier locked in a proxy battle with its largest shareholder over management of the boutique hotelier and the influence of primary debtholder Yucaipa Cos., voted out the company's current board and will replace it with a slate proposed by shareholder OTK Associates, according to OTK.
OTK, which owns 14% of the company, said in a statement Friday that all seven of its board nominees were voted in "overwhelmingly" in this week's shareholder vote, according to preliminary results. The vote will be independently certified shortly, according to OTK.
"The outcome of this vote sends a clear and irrefutable message from Morgans stockholders that meaningful change was needed at the company," OTK founding member and board nominee Michael Olshan said in Friday's statement. "The new board is eager to begin working constructively to address the company's balance sheet and expense structure, and to run the company in a manner that is in the best interest of all stockholders."
Among the OTK nominees, in addition to Olshan, were John Dougherty, Olshan Hotel Management vice president; Mahmood Khimji, Highgate Holdings co-founder; and Jonathan Langer, former Kerzner International Resorts director and ex-Goldman Sachs managing director.
Morgans' current board recently said it would try to sell the company upon board re-election, adding that OTK's proposed board would cause a "stalemate" with Yucaipa and would be ineffective at addressing the company's debt issues.
Morgans shares were down about 4% as of about noon Eastern on Friday. The stock, while up about 50% since March, has lost more than half its value since late 2008.
Follow Danny King on Twitter @dktravelweekly.