MoneyGram 2005 Annual Report Download - page 35

Table of Contents
in 2004 related to the $150.0 million in borrowings made under the Company's credit facility entered into in connection with the spin-off and stock option
exercises. All 2003 cash flows relate to actions taken by Viad, including paying down $105.7 million of debt, net payments on the revolver of $5.0 million,
payment of dividends totaling $31.6 million and acquisitions of treasury stock at a cost of $1.0 million.
Other Funding Sources and Requirements
In connection with the spin-off, MoneyGram entered into a bank credit facility providing availability of up to $350.0 million in the form of a $250.0 million
four-year revolving credit facility and a $100.0 million term loan. On June 30, 2004, the Company borrowed $150.0 million (consisting of the $100.0 million
term loan and $50.0 million under the revolving credit facility) and used all of the proceeds to pay merger consideration to Viad in connection with the spin-
off. On June 29, 2005, the Company amended its bank credit facility. The amended agreement extends the maturity date of the facility from June 2008 to June
2010, and the scheduled repayment of the $100.0 million term loan to June 2010. Under the amended agreement, the credit facility may be increased to
$500.0 million under certain circumstances. In addition, the amended agreement reduced the interest rate applicable to both the term loan and the credit
facility to LIBOR plus 50 basis points, subject to adjustment in the event of a change in the credit rating of our senior unsecured debt. The amendment also
reduced usage fees on the facility to a range of 0.080% to 0.250%, depending on the credit rating of our senior unsecured debt. Restrictive covenants relating
to dividends and share buybacks were eliminated, and the dollar value of permissible acquisitions without lender consent was increased. In connection with
the amendment, the Company expensed $0.9 million of unamortized deferred financing costs relating to the original bank credit facility during the quarter
ended June 30, 2005. The Company also incurred $0.5 million of financing costs to complete the amendment. These costs have been capitalized and will be
amortized over the life of the debt.
The remaining availability under the bank credit facility is available for general corporate purposes and to support letters of credit. Loans under the bank
credit facility are guaranteed on an unsecured basis by MoneyGram's material domestic subsidiaries. Borrowings under the bank credit facilities are subject to
various covenants, including interest coverage ratio, leverage ratio and consolidated total indebtedness ratio. The interest coverage ratio of earnings before
interest and taxes to interest expense must not be less than 3.5 to 1.0. The leverage ratio of total debt to total capitalization must be less than 0.5 to 1.0. The
consolidated total indebtedness ratio of total debt to earnings before interest, taxes, depreciation and amortization must be less than 3.0 to 1.0. At
December 31, 2005, we were in compliance with these covenants. On December 31, 2005, the interest rate under the bank credit facility was 5.02%, exclusive
of the effect of commitment fees and other costs, and the facility fee was 0.125%.
In September 2005, the Company entered into two interest rate swap agreements with a total notional amount of $150.0 million to hedge our variable rate
debt. These swap agreements are designated as cash flow hedges. At December 31, 2005, the two debt swaps had an average fixed pay rate of 4.3 percent and
an average variable receive rate of 3.9 percent.
At December 31, 2005, we had reverse repurchase agreements, letters of credit and various overdraft facilities totaling $1.8 billion available to assist in the
management of our investments and the clearing of payment service obligations. There was $100.0 million outstanding under the reverse repurchase
agreements and $10.4 million outstanding under various letters of credit at December 31, 2005.
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