Shareholders of Morgans Hotel Group, the chain of 13 boutique hotels, wants billionaire Ron Burkle out.
Investors in the New York company, which owns the Mondrian, Morgans and Royalton hotels in the Big Apple, today voted to boot the company’s entire slate of seven directors, including Burkle, the CEO of Yucaipa Cos., in favor of a slate put up by OTK Associates, a large shareholder.
The stinging loss by the management of the money-losing chain reflects shareholder unhappiness with the recent plans of the company, including a deal to give Morgans’ crown jewel, the Delano hotel in South Beach, to Yucaipa as part of a complex debt swap.
Among the first steps of the new board will be to re-evaluate the management team, which could result in a new CEO, a source told The Post.
Shares of Morgans fell 5.4 percent, to $7.15 a share, after the vote.
“The outcome of this vote sends a clear and irrefutable message from Morgans stockholders that meaningful change was needed at the company,” said Michael Olshan, a founding member of OTK, which holds 14 percent of Morgans stock.
“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,” he said.
“It’s rare for shareholders to agree to overthrow an entire board,” noted Bruce Goldfarb, founder of proxy solicitation firm Okapi Partners, which worked with OTK.
Executives this morning at the Morgans annual shareholder meeting, which was held at its posh Hudson Hotel in Midtown Manhattan, said the final results will be released in two to five business days.
OTK based its victory Friday on the preliminary vote count.
The company tried unsuccessfully to stem shareholder unrest — and turn around a five-year slide in the shares of 44 percent — by announcing a potential sale of the company in the days leading up to the vote.
“A sale of the company at this time is the appropriate strategy, and that if our slate were to win, that is what we would do,” said Morgans CEO and director Michael Gross when asked for comment on the results.
Gross declined to comment on the preliminary results provided by OTK, but said Morgans has received nine expressions of interest from strategic hospitality companies.
The new board will include OTK founding member Jason Kalisman and his six nominees, including Olshan and Mahmood Khimji, co-founder of Highgate Holdings, a private hotel company.
The new board may still include Burkle since Yucaipa is a large debt holder of Morgans and is contractually obligated to hold a seat, a source said.
Burkle was not at the Hudson Hotel meeting, which kicked off around 10:15 a.m. and was over by 10:30 a.m.
Morgans had previously cut a deal with Yucaipa to swap some $230 million in Morgans debt and preferred stock for the Delano and a restaurant company.
OTK and Kalisman opposed the deal in part because it was tied to a $6 per-share stock offering that could have allow Burkle to take a whopping 32 percent of Morgans stock.
Kalisman sued to stop the deal in Delaware Chancery Court, where a judge recently sent the plan back to the drawing board, saying it hadn’t been properly vetted by the board of directors.
The Delaware Chancery judge also ordered the company to set today’s shareholder meeting, which it had been delaying.
kwhitehouse@nypost.com
