MoneyGram 2008 Annual Report Download - page 5

Table of Contents
In December 2008, after evaluating our market opportunity for certain of our electronic payment services, we announced our decision to
exit our ACH Commerce business and to cease providing Web, telephone and IVR-based bill payment services other than our
PropertyBridge service and our eMoney Transfer service described below.
On February 2, 2009, we acquired the French assets of R. Raphael's & Sons PLC ("Raphael's Bank"). The acquisition of Raphael's Bank
provides us with five highly productive money transfer stores in and around Paris, France that will be integrated into our French retail
operations.
Capital Transaction
On March 25, 2008, following the deterioration of the asset-backed securities and broader credit markets and the corresponding losses in
our investment portfolio, we completed a capital transaction pursuant to which we received a substantial infusion of both equity and debt
capital (the "Capital Transaction") to support the long-term needs of the business. The equity component of the Capital Transaction
consisted of the sale to affiliates of Thomas H. Lee Partners, L.P. ("THL") and affiliates of Goldman, Sachs & Co. ("Goldman Sachs" and
together with THL, the "Investors") in a private placement of 760,000 shares of Series B Participating Convertible Preferred Stock of the
Company (the "B Stock") and Series B-1 Participating Convertible Preferred Stock of the Company (the "B-1 Stock," and together with
the B Stock, the "Series B Stock") for an aggregate purchase price of $760.0 million. The issuance of the Series B Stock gave THL and
Goldman Sachs an initial equity interest of approximately 79 percent. In connection with the Capital Transaction, we also paid Goldman
Sachs an investment banking advisory fee equal to $7.5 million in the form of 7,500 shares of B-1 Stock. For a description of the terms of
the Series B Stock, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and
Capital Resources — Sale of Investments and Capital Transaction" and Note 12 — Mezzanine Equity of the Notes to Consolidated
Financial Statements.
As part of the Capital Transaction, we entered into a Registration Rights Agreement with the Investors which requires us to promptly file
a shelf registration statement with the United States Securities and Exchange Commission ("SEC") relating to the Series B Stock issued
to the Investors after a specified holding period. We are generally obligated to keep the shelf registration statement effective for up to
15 years or, if earlier, until all the securities owned by the Investors have been sold. The Investors are also entitled to five demand
registrations and unlimited piggyback registrations.
As part of the Capital Transaction, MoneyGram Payment Systems Worldwide, Inc. ("Worldwide"), a wholly-owned subsidiary of the
Company, issued Goldman Sachs $500.0 million of senior secured second lien notes (the "Notes") with a 10 year maturity. Additionally,
Worldwide entered into a senior secured amended and restated credit agreement with JP Morgan Chase as agent for a group of lenders
(the "Senior Facility"), amending the Company's existing $350.0 million debt facility, adding $250.0 million of term loans to bring the
total facility to $600.0 million. The new facility includes $350.0 million in two term loan tranches and a $250.0 million revolving credit
facility. For a description of the terms of the Notes and Senior Facility, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations — Liquidity and Capital Resources — Sale of Investments and Capital Transaction" and Note 10
— Debt of the Notes to Consolidated Financial Statements.
Our Segments
We conduct our business through two segments: Global Funds Transfer and Payment Systems. For financial information regarding our
business and our segments, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Results of
Operations" and Note 17 — Segment Information of the Notes to Consolidated Financial Statements. Following is a description of each
segment.
Global Funds Transfer Segment
Our Global Funds Transfer segment provides money transfer services, bill payment services and money orders to consumers, who are
often "unbanked" or "underbanked." "Unbanked consumers" are those consumers who do not have a traditional relationship with a
financial institution. "Underbanked consumers" are consumers who, while they may have a savings account with a financial institution,
do not have a checking account. Other consumers who use our services are "convenience users" who may have a checking account with a
financial institution, but prefer to
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