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Morgans Hotel Group Selects Golden Gaming to Operate Hard Rock Hotel & Casino Gaming Facilities
Morgans Hotel Group, Co. (Nasdaq: MHGC) ("MHG"), a fully integrated hospitality company that operates boutique hotels in gateway cities under well-known brands such as Delano, Mondrian and Hudson, today announced that it has entered into a non-binding Letter of Intent ("LOI") with Golden Gaming, Inc., a major gaming enterprise in Nevada whose principals have extensive experience in casino management, for Golden Gaming or an affiliate to serve as casino operator for the Hard Rock Hotel & Casino following its acquisition by MHG. MHG's pending acquisition of the Hard Rock Hotel & Casino, located in Las Vegas, was announced on May 11, 2006.
The LOI contemplates that Golden Gaming will provide general management services for all gaming and related activities within the Hard Rock Hotel & Casino for a period of up to two years. The financial terms are consistent with MHG's earlier guidance and will be fully disclosed once a definitive agreement has been executed. In addition, the LOI provides that Golden Gaming shall have the opportunity to make an equity investment of up to $100 million in the Hard Rock Hotel & Casino on terms to be agreed between MHG and Golden Gaming.
"We are pleased that we have reached agreement with Golden Gaming to serve as the licensed casino operator for the Hard Rock," said W. Edward Scheetz, President and Chief Executive Officer of MHG. "Lining up a casino operator was a top priority for us and we now have put into motion a key element of the Hard Rock transition. We are delighted to be working with Blake Sartini and his talented team. Blake is a respected industry veteran and we look forward to working together toward a successful launch of the Hard Rock under MHG's ownership."
"The addition of the Hard Rock represents a major step in the execution of our growth strategy while maintaining our commitment to providing the best boutique hotel experience available. We are actively pursuing other opportunities with respect to our Hard Rock purchase, including alternatives for the development of the land and for monetization of intellectual property rights. Perhaps most importantly, we are focused on identifying equity partners and we are currently in discussions with potential partners. We are pleased with the interest we are seeing and expect to announce our partners before the close of the transaction," continued Mr. Scheetz. "The Hard Rock is a great strategic fit for Morgans Hotel Group and it accelerates our entry into Las Vegas, one of the fastest growing hotel markets in the world. We are delighted that we took the prize in a competitive process and we look forward to closing the transaction as soon as possible."
Golden Gaming was formed by Blake Sartini in October of 2001 after the purchase of Southwest Gaming Services, Inc. Golden Gaming employs more than 1,300 team members throughout Nevada and Colorado and is one of the premier operators of casinos, taverns and gaming devices in these states. Mr. Sartini has more than 24 years of experience in the hotel and casino industry. Before acquiring Golden Gaming in 2001, Mr. Sartini was Chief Operating Officer of Station Casinos, Inc., and remains one of its largest shareholders.
"We are excited to have established a relationship with the Morgans Hotel Group. The Hard Rock Hotel & Casino represents a true icon in the Las Vegas resort market, and we anticipate a creative working relationship with Morgans Hotel Group to continue to establish the Hard Rock Hotel & Casino as one of the premier gaming and entertainment resorts in the city," said Mr. Sartini, President and Chief Executive Officer of Golden Gaming.
About Morgans Hotel Group
Morgans Hotel Group Co. (Nasdaq: MHGC) which is widely credited with establishing and developing the rapidly expanding boutique hotel sector, owns and operates Morgans, Royalton and Hudson in New York, Delano and The Shore Club in Miami, Mondrian in Los Angeles and Scottsdale, Clift in San Francisco, and Sanderson and St Martins Lane in London. MHG has other property transactions in various stages of completion including projects in Miami Beach, Florida, and Las Vegas, Nevada, and continues to vigorously pursue its strategy of developing unique properties at various price points in international gateway cities in the United States, Europe, South America, Asia and around the world. For more information please visit www.morganshotelgroup.com.
About Golden Gaming, Inc.
Golden Gaming, Inc., along with its affiliate Golden Mardi Gras, Inc., operates three divisions: Golden Casino Group, consisting of the Golden Mardi Gras Casino, Golden Gates Casino and Golden Gulch Casino in Black Hawk, Colorado; Golden Tavern Group, Nevada's largest tavern operator with 43 establishments; and Golden Route Operations (G.R.O.), Nevada's third largest slot route operator with over 2,500 machines in more than 200 locations throughout the state. Golden Gaming, Inc. also recently entered into an agreement to acquire the Pahrump Nugget Hotel & Gambling Hall in Pahrump, Nevada, pending licensing and regulatory approval. For more information, please visit www.goldengaminginc.com.
Forward-Looking and Cautionary Statements
Statements contained in this press release which are not historical facts are forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "projects," "intends," "believes," "guidance," and similar expressions that do not relate to historical matters. These forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors which include, but are not limited to, downturns in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; risks related to natural disasters, such as earthquakes and hurricanes; the completion of transactions and the integration of properties with our existing business; the seasonal nature of the hospitality business; changes in the tastes of our customers; increases in real property tax rates; increases in interest rates and operating costs; general volatility of the capital markets and our ability to access the capital markets; and changes in the competitive environment in our industry and the markets where we invest, and other risk factors discussed in Morgans Hotel Group Co.'s Annual Report on Form 10-K and other documents filed by the Company with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are made as of today, based upon information known to management as of the date hereof, and the Company assumes no obligations to update or revise any of its forward-looking statements even if experience or future changes show that indicated results or events will not be realized. |
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