Morgans Hotel Group's Largest Shareholder Comments on Agreement with The Yucaipa Companies

OTK Associates LLC, the largest shareholder of Morgans Hotel Group Co.

with 13.9% of the outstanding common stock of the company, today commented on Morgans' agreements with The Yucaipa Companies. As the largest shareholder of Morgans, OTK Associates is deeply concerned by the company's announcement of a material transaction with an insider and major creditor during an ongoing proxy process. OTK Associates questions whether the board's special committee has appropriately considered, in earnest,alternatives to consummating yet another ill-timed transaction with an interested party,especially given that two of Morgans' directors have a significant financial interest in the transaction. Furthermore, the attempt