UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D/A

 

Under the Securities Exchange Act of 1934
(Amendment No. 14)*

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. o

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

(1) Includes beneficial ownership of common stock of the issuer through vested restricted stock units for 22,367 shares of the issuer’s common stock.

 

(2) Beneficial ownership of common stock of the issuer is through warrants to purchase an aggregate of 12,500,000 shares of the issuer’s common stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,122,932 shares of the issuer’s common stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed on April 16, 2014, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(2) Beneficial ownership of common stock of the issuer is through warrants to purchase an aggregate of 12,500,000 shares of the issuer’s common stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,122,932 shares of the issuer’s common stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed on April 16, 2014, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(2) Beneficial ownership of common stock of the issuer is through warrants to purchase an aggregate of 12,500,000 shares of the issuer’s common stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,122,932 shares of the issuer’s common stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed on April 16, 2014, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(2) Beneficial ownership of common stock of the issuer is through warrants to purchase an aggregate of 12,500,000 shares of the issuer’s common stock.  Exercise of the warrants is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,122,932 shares of the issuer’s common stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed on April 16, 2014, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(3) Beneficial ownership of common stock of the issuer is through a warrant to purchase 7,535,580 shares of the issuer’s common stock.  Exercise of the warrant is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,122,932 shares of the issuer’s common stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed on April 16, 2014, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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(4) Beneficial ownership of common stock of the issuer is through a warrant to purchase 4,964,420 shares of the issuer’s common stock.  Exercise of the warrant is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise.  The percent of class of the issuer’s common stock beneficially owned is based on 34,122,932 shares of the issuer’s common stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed on April 16, 2014, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

* See Instructions

 

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This Amendment No. 14 to Schedule 13D amends and supplements the Schedule 13D filed with the Securities and Exchange Commission (the “SEC”) on November 25, 2009 (as amended to date, this “Schedule 13D”) by (i) Ronald W. Burkle, an individual, (ii) Yucaipa American Management, LLC, a Delaware limited liability company (“Yucaipa American”), (iii) Yucaipa American Funds, LLC, a Delaware limited liability company (“Yucaipa American Funds”), (iv) Yucaipa American Alliance Fund II, LLC, a Delaware limited liability company (“YAAF II LLC”), (v) Yucaipa American Alliance Fund II, L.P., a Delaware limited partnership (“YAAF II”), and (vi) Yucaipa American Alliance (Parallel) Fund II, L.P., a Delaware limited partnership (“YAAF II Parallel” and, together with YAAF II, the “Investors”; and the Investors, together with Mr. Burkle, Yucaipa American, Yucaipa American Funds, and YAAF II LLC, are referred to herein as the “Reporting Persons”), with respect to the common stock, par value $0.01 per share (the “Common Stock”), of Morgans Hotel Group Co., a Delaware corporation (the “Company”).  The filing of any amendment to this Schedule 13D (including the filing of this amendment) shall not be construed to be an admission by the Reporting Persons that a material change has occurred in the facts set forth in this Schedule 13D or that such amendment is required under Rule 13d-2 of the Securities Exchange Act of 1934, as amended.

 

Item 4.           Purpose of the Transaction.

 

Item 4 of this Schedule 13D is hereby supplemented to add the following:

 

On May 7, 2014, the Yucaipa Parties sent a letter to the Interim CEO of the Company outlining repeated failures by the Company to honor the Investors’ board observation rights. The letter is filed as an exhibit to this Amendment to Schedule 13D.

 

Item 5 of this Schedule 13D is hereby amended to delete paragraph (a)(ii) in its entirety and replace it with the following:

 

(ii) Based upon the 34,122,932 shares of Common Stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed with the SEC on April 16, 2014, the number of shares of Common Stock directly beneficially owned by YAAF II, YAAF II Parallel and Mr. Burkle represents approximately 18.1% (3), 12.7% (4) and 0.1% of the Common Stock, respectively, and 26.9% of the Common Stock in the aggregate, in each case on a diluted basis.

 

Item 7.                   Material to be Filed as Exhibits.

 

Exhibit No.		Description of Exhibit
1.		Letter dated May 7, 2014 to the Interim CEO of the Company.

 

(3) Beneficial ownership of common stock of the issuer is through a warrant to purchase 7,535,580 shares of the issuer’s common stock. Exercise of the warrant is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise. The percent of class of the issuer’s common stock beneficially owned is based on 34,122,932 shares of the issuer’s common stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed with the SEC on April 16, 2014, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

(4) Beneficial ownership of common stock of the issuer is through a warrant to purchase 4,964,420 shares of the issuer’s common stock. Exercise of the warrant is subject to mandatory cashless exercise, which reduces the shares of issuer’s common stock received upon exercise, and the number of shares received will be determined by the fair market value of the issuer’s common stock at the time of such exercise. The percent of class of the issuer’s common stock beneficially owned is based on 34,122,932 shares of the issuer’s common stock outstanding as of April 2, 2014, as reported on the issuer’s definitive proxy statement on Schedule 14A, filed with the SEC on April 16, 2014, and does not reflect any reduction for the effect of the mandatory cashless exercise as the amount of such reduction is not determinable until the time of exercise.

 

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SIGNATURES

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Dated:  May 8, 2014

 

	RONALD W. BURKLE
	By:	/s/ Ronald W. Burkle
	YUCAIPA AMERICAN MANAGEMENT, LLC
	By:	/s/ Ronald W. Burkle
		Name: Ronald W. Burkle
		Its: Managing Member
	YUCAIPA AMERICAN FUNDS, LLC
	By: Yucaipa American Management, LLC
	Its: Managing Member
		By:	/s/ Ronald W. Burkle
			Name: Ronald W. Burkle
			Its: Managing Member
	YUCAIPA AMERICAN ALLIANCE FUND II, LLC
	By: Yucaipa American Funds, LLC
	Its: Managing Member
		By: Yucaipa American Management, LLC
		Its: Managing Member
			By:	/s/ Ronald W. Burkle
				Name: Ronald W. Burkle
				Its: Managing Member

 

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	YUCAIPA AMERICAN ALLIANCE FUND II, L.P.
	By: Yucaipa American Alliance Fund II, LLC
	Its: General Partner
		By: Yucaipa American Funds, LLC
		Its: Managing Member
			By: Yucaipa American Management, LLC
			Its: Managing Member
				By:	/s/ Ronald W. Burkle
					Name: Ronald W. Burkle
					Its: Managing Member
	YUCAIPA AMERICAN ALLIANCE (PARALLEL) FUND II, L.P.
	By: Yucaipa American Alliance Fund II, LLC
	Its: General Partner
		By: Yucaipa American Funds, LLC
		Its: Managing Member
			By: Yucaipa American Management, LLC
			Its: Managing Member
				By:	/s/ Ronald W. Burkle
					Name: Ronald W. Burkle
					Its: Managing Member

 

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Exhibit 1

 

The Yucaipa Companies

 

Ron Burkle

 

May 7, 2014

 

Jason Kalisman

via e-mail: JTK@talismangi.com

Interim CEO

Morgans Hotel Group Co.

475 Tenth Avenue

New York, NY 10018

 

RE: Yucaipa Funds Investment Rights

 

Dear Jason:

 

We have done everything we can to try and get along with the current board of directors including you.  We’ve agreed to settle all legal actions because we believed that the parties would in the future act reasonably toward one another. We are, of course, a major owner of Morgans with exposure far greater than any other holder, including yourself, and believe there is great value in the company.

 

One of the lawsuits we filed in New York dealt with our belief that Yucaipa’s board observation rights were being ignored and subverted. In spite of the fact that the parties negotiated in good faith to settle that lawsuit (along with others) we are still being ignored and excluded.

 

A significant number of executives were dismissed without any discussion at the board level - at least where we were allowed to participate.  Perhaps the dismissal, termination or resignation of one key executive could be excused, but the blanket termination of a significant portion of your key executives definitely required discussion at the board prior to the effective date of those terminations - we should have been there for those discussions. We understand that the friction costs alone in the dismissal was greater than $7 million.

 

On April 22, 2014 you held a board meeting without even telling us.  We were advised after the meeting was over.  I instructed our general counsel to write Meredith Deutsch, your acting general counsel, to outline our concerns and displeasure with being again ignored.  It was at that meeting that you terminated the poison pill in response to the ISS demand that that rights plan be terminated in return for their vote for your slate of directors in the upcoming annual meeting.  We can think of no reason why we should have been excluded from that meeting and those discussions.

 

 

A meeting of the board was held on May 4, 2014 and while at least we were invited to this meeting again we were excluded from certain topics, including the distress and resulting ongoing restructuring discussions surrounding the Mondrian Soho.  Further, it was just now disclosed that the Mondrian South Beach property had fallen into distress with much-needed renovation capital held “hostage” by its owners.  We were also unaware that certain development contracts were at risk and dispute, including Mondrian Istanbul and Bahamar as well as operational weakness in Mondrian Los Angeles.  Why any discussion of underperforming assets would be so privileged and sensitive as to require that we be excluded or withheld information just doesn’t make sense, particularly when we could be a constructive source for solutions.

 

We are a major owner, we are interested in participating in discussions and decisions concerning the operation of Morgans’ business and the performance of its assets.  These are clearly mandated by our observation rights but as stated above, are being completely ignored.

 

We respectfully request that you instruct your counsel to allow us to fully participate in all board meetings, that we receive adequate notice of those meetings along with copies of the materials to be discussed and that we only be excluded from truly privileged items probably relating only to those issues where there is a direct conflict or legal issue with Yucaipa and its Funds.

 

Yours very truly,
/s/ Ronald W. Burkle
Ronald W. Burkle

 

cc:                                Judi Kitano

George Garvey

Ira Tochner

Brad Nugent

Robert Bermingham

 

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