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| MHGC > SEC Filings for MHGC > Form 8-K on 7-Aug-2012 | All Recent SEC Filings |
7-Aug-2012
Other Events, Financial Statements and Exhibits
Morgans Hotel Group Co. (the "Company") issued a joint press release on August 6, 2012 with MGM Resorts International ("MGM Resorts") announcing a partnership to introduce Delano Las Vegas, an all-suite hotel at Mandalay Bay. After completing a property update, MGM Resorts will convert THEhotel to Delano Las Vegas, which is expected to be completed in late 2013. The conversion of THEhotel to Delano Las Vegas will be funded by MGM Resorts.
Delano Las Vegas will be managed by MGM Resorts pursuant to a 10-year licensing agreement, with two 5-year extensions at the Company's option, subject to performance thresholds. The Company will earn a base fee, subject to increase based on the Company's development and brand expansion. Additionally, the Company can earn an incentive fee based on Delano Las Vegas' revenue per available room penetration in its competitive set.
The Company will also acquire the leasehold interests in three restaurants at Mandalay Bay from an existing tenant for $15.0 million in cash at closing and $1.5 million annually to be paid over seven years. The venues will be reconcepted and managed by The Light Group, the Company's 90% owned subsidiary. The three restaurants will be operated pursuant to 10-year operating leases with MGM Resorts, pursuant to which the Company will pay minimum annual lease payments and a percentage rent based on cash flow.
In addition, The Light Group will manage a yet to be announced nightclub at Mandalay Bay to be owned by a venture that includes The Yucaipa Companies, an equity holder in the Company, and Andrew Sasson, a member of the Company's Board of Directors.
The exhibit contained in this current report on Form 8-K shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.
(d) Exhibits.
99.1 Press Release, dated August 6, 2012
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