OTK Associates Files Motion to Join Derivative Lawsuit Against Morgans Hotel Group

OTK Associates LLC, the largest stockholder of Morgans Hotel Group Co.(Nasdaq: MHGC) with 13.9% of the outstanding common stock of the company,today disclosed that it has filed a motion to join a derivative lawsuit filedin Delaware Chancery Court to stop a self-serving recapitalization that thecompany is rushing to consummate in advance of a stockholder meeting initiallyscheduled for May 15, 2013.OTK Associates also issued the following letter to MHGC stockholders:April 5, 2013Dear Fellow Stockholders,We are writing to inform you that we have filed a motion to join the recentlyfiled derivative lawsuit against Morgans Hotel Group that seeks to stop aseries of transactions with the Yucaipa Companies which the company'sdirectors are rushing to consummate. The board's actions are invalid underapplicable Delaware law, and will further disenfranchise stockholders whilethoroughly entrenching the current board and management.As the company's largest stockholder, we are deeply concerned by actions ofthis nature deliberately undertaken during an ongoing proxy process. Theboard's move to effectuate a coercively dilutive recapitalization is anobvious attempt to place a large block of stock in friendly hands prior to theannual meeting in order to preserve the positions of its incumbent directorsand avoid review of the transaction by a truly independent board.Similarly, the board's retroactive decision to postpone the previouslyscheduled annual meeting to July 10, 2013 from May 15, 2013, and to reset themeeting's record date to May 29, 2013 from March 22, 2013, serves only toensure stockholders will be denied the benefit of reviewing the transaction.Existing stockholders of record will effectively lose their right to castvotes at the May 15^th meeting, where we believe the company's incumbentdirectors would likely be replaced by OTK's proposed nominees. This attempt toboth rig an election and defend a self-dealing transaction will further burnthe funds of a company already operating at a loss.To preserve stockholders' rights and the integrity of the corporatedecision-making process we are seeking the following: * An injunction against the recapitalization plan until after the company's 2013 annual meeting and the anticipated election of a new board, as proposed by OTK Associates; * To invalidate the board's decision to retroactively postpone the 2013 annual meeting and reset the corresponding record date; and, * A declaration that the directors have breached their duties of loyalty to the company and its stockholders.Without significant change at the board level, we fear that Morgans willcontinue its pattern of impairing shareholder value, engaging in self-servingtransactions,operating at meaningful losses and damaging the tremendouspotential of the company's brands and existing assets.While the litigation is ongoing, we will continue to exercise totaltransparency and keep you updated as appropriate. We look forward to pursuinga proxy campaign that ensures all stockholders are afforded the rights thatthey deserve and the leadership the company so desperately needs. Members ofour slate possess the specific industry experience, financial sophisticationand operating relationships to immediately begin repositioning the company.If you have questions, we urge you to call our proxy solicitor, Okapi PartnersLLC, toll-free at (877) 869-0171. You may also email questions toinfo@okapipartners.comSincerely,/s/ OTK Associates, LLCOTK Associates, LLC