DOW JONES NEWSWIRES
MoneyGram International Inc. (MGI) said Thomas H. Lee Partners
and affiliates of Goldman Sachs Group Inc. (GS) have agreed to
convert preferred shares they acquired in 2008 to help capitalize
the then-struggling money transfer company.
The deal comes as MoneyGram has seen its performance rebound
lately and has been expanding internationally with new partners. It
had posted substantial losses during the downturn and, like larger
rival Western Union Co. (WU), struggled in the wake of the
financial crisis with sluggish demand for its services.
In 2008, Thomas H. Lee, a Boston-based private equity firm, and
Goldman had agreed to purchase $760 million of Series B and Series
B-1 preferred stock, initially convertible at $2.50 a share into
about 79% of the common equity of the company. MoneyGram also
reached an agreement with Goldman affiliates to provide $500
million in debt financing.
MoneyGram said Tuesday that under the deal, Thomas H. Lee would
convert its Series B preferred shares into common stock. Goldman
would convert its Series B-1 preferred shares into so-called Series
D participating convertible preferred shares, a nonvoting
equivalent to common stock.
Thomas H. Lee would also receive 28.2 million additional shares
and $140.8 million in cash, while Goldman would get 15,504 shares
of Series D preferred stock--equivalent to 15.5 million common
shares--and $77.5 million in cash. The investors would hold
respective stakes of 55% and 30%.
"This transition simplifies our capital structure, ends the
dilution from the continuing dividend payments required by the
preferred stock terms, and increases the attractiveness of our
common stock," MoneyGram Chairman and Chief Executive Pamela H.
Patsley said.
MoneyGram also said it is working with banks to put in place a
new senior secured credit facility, which it would use to refinance
an existing facility and fund the recapitalization deal.
MoneyGram shares closed Monday at $2.68 and were inactive in
recent premarket trading.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com