MoneyGram International has agreed to amend its 12 February recapitalisation agreement with the investment group led by Thomas H. Lee Partners and Goldman Sachs after failing to meet all agreed upon closing conditions.
The initial agreement required that MoneyGram have, on a pro forma basis for the transaction, at least $150 million (€97.5 million) of unrestricted assets, according to a statement. This condition was unmet as well as others which were unspecified.
Under the amended agreement, the investors will purchase $760 million of preferred stock convertible to 79 percent of common equity. Under the original deal’s terms, the investment was expected to range from $710 million to $775 million accounting for 63 percent of the company.
If MoneyGram is unable to pay a cash dividend on the preferred stock, dividends will accrue at a rate of 15 percent as opposed to the original 12.5 percent, the company said. The preferred stock will be convertible to common stock at a price of $2.50 per share, down from the previous $5.00 per share.
The company will also be required to raise an incremental $50 million of debt.
MoneyGram is permitted to solicit alternative buyout proposals, following the end of the original go-shop period which concluded on 7 March.
The transaction will now be structured as a one-step purchase of convertible preferred stock as opposed to the two-step transaction agreed to in the original terms. MoneyGram will reimburse the investors for transaction related expenses.
MoneyGram is a payment services company which suffered fallout due to its subprime mortgage exposure. The New York Stock Exchange-listed company has some 143,000 global money transfer agent locations in 170 countries and territories and counts Wal-Mart among its clients.