Behind the Ugly Battles Over Morgans and Amanresorts

Aman Le Mélézin
Aman Le Mélézin // Photo by Aman

Their hotels are popular the world over, but behind the scenes there is and continues to be turmoil for Morgans Hotel Group and Amanresorts.

It's been a tumultuous stretch for Morgans, with shareholders up in arms about the company's future. Much of it coming from the Ron Burkle-led Yucaipa Companies, which back in November made an unsolicited and conditional proposal to acquire Morgans Hotel Group for $8.00 per share. The offer was not immediately accepted, and there has been no word since.

Then, in March, Morgans laid off about a third of its corporate staff.

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Today, there is new word about the company's direction. Back in May, the special transaction committee of the Morgans Board of Directors, formed at the beginning of 2014, retained Morgan Stanley to assist the company in evaluating a full range of strategic alternatives, including capital raising, asset sales, strategic partnerships, a sale of the entire company, a sale of component parts of the company, acquisitions and other alternatives.  

Today, Morgans disclosed that the special transaction committee has directed Morgan Stanley to reach out to possible counterparties regarding their interest in potential transactions that could provide Morgans an opportunity to maximize value for its stockholders.

Updates to stockholders are forthcoming once the special transaction committee approves a specific transaction or otherwise concludes its strategic review.

Looks like it's wait and see.

Aman Unrest

For Amanresorts, it's been about a power struggle at the top. In July, Adrian Zecha, the founder of Amanresorts, was reinstated as CEO by order of the High Court in London. The High Court injunction followed an unlawful attempt by Vladislav Doronin to remove Zecha as CEO and force him from his home of 15 years.

The court found Doronin's attempt to crown himself CEO, without board approval, was unlawful and in violation of his joint venture agreement with Omar Amanat, chairman of Amanresorts.

"I am delighted that Adrian is now back in charge. He will remain in charge until such time a suitable successor can be found. It is essential to me that Adrian retires in a manner of his own choosing, which requires that his loyal staff, who have helped build up Aman into what is, are looked after. The Aman brand and the legacy of Adrian Zecha are and shall forever be inextricably linked," Amanat said at the time of the decision.

The back and forth followed years of speculation of who would ultimately control the ultra-luxury hotel company. Amanresorts was bought from its previous owners in a $358-million deal in February 2014 by a joint venture between Amanat and Doronin, a Russian businessman. As part of the deal, Zecha was to remain as CEO.

However, bids for the company started years ago.

Today, Fortune released an in-depth story on the "nasty battle" for the company. The story's sub-head says it all: "Almost as fast as entrepreneur Omar Amanat and Russian billionaire Vladislav Doronin teamed up to buy ultraluxe Aman Resorts, the partnership exploded in acrimony and litigation. As the two battle for control, it’s up to the courts to decide: Who conned whom?"

It's a rather long article, but worth the read.

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