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Yucaipa responds to Morgans Hotel proxy contest announcement

The Yucaipa Companies, an investment firm owned and run by Ron Burkle, reacted to the announcement by OTK Associates that the preliminary results of the proxy contest for the Morgans Hotel Group resulted in the election of the entire OTK slate. Yucaipa released the following statement: "We understand that OTK has announced that the preliminary results of the Morgans proxy contest have resulted in the election of the OTK slate. If this turns out to be the final result, we are disappointed. We do not believe that OTK will begin a sales process for Morgans. Yucaipa continues to own all of Morgans' preferred stock, over 50% of its convertible notes, and warrants for 12.5M shares of its common stock. We also hold certain key consent rights and are well positioned to protect our interest in Morgans. We expect OTK's reference to honor all of the company's previously negotiated commitments includes these substantial obligations to Yucaipa as we intend to assert all of our rights and remedies to protect them, which we feel is best addressed by exploring strategic alternatives including a sale of the company. As previously disclosed, Morgans has received over nine expressions of interest in the company and to not follow up on these is clearly not in the best interest of all stakeholders."