MoneyGram 2008 Annual Report Download - page 51

Table of Contents
accept security deposits and rent payments. Residents can pay rent online, by phone or in person and set up recurring payments.
PropertyBridge is a component of our Global Funds Transfer segment. We incurred $0.2 million of transaction costs in connection with
this acquisition.
The final purchase price allocation resulted in goodwill of $24.1 million and purchased intangible assets of $6.0 million, consisting
primarily of customer lists, developed technology and a non-compete agreement. Goodwill was assigned to our Global Funds Transfer
segment. The intangible assets will be amortized over useful lives ranging from three to 15 years. The operating results of PropertyBridge
subsequent to October 1, 2007 are included in the Company's Consolidated Statements of (Loss) Income.
Money Express — On May 31, 2006, MoneyGram completed the acquisition of Money Express S.r.l. ("Money Express"), our former
money transfer super-agent in Italy, for $15.0 million. In connection with the acquisition, we formed MoneyGram Payment Systems
Italy, S.r.l., a wholly owned subsidiary, to operate the former Money Express agent network. The acquisition provides us with the
opportunity for further network expansion and more control of marketing and promotional activities in the region. We incurred
$1.3 million of transaction costs and forgave $0.7 million of liabilities in connection with this transaction.
The final purchase price allocation resulted in $16.7 million of goodwill and purchased intangible assets of $7.7 million, consisting
primarily of customer lists and a non-compete agreement. Goodwill was assigned to our Global Funds Transfer segment. The intangible
assets will be amortized over useful lives ranging from three to five years. The operating results of Money Express subsequent to May 31,
2006 are included in the Company's Consolidated Statements of (Loss) Income.
ACH Commerce — We purchased ACH Commerce, LLC ("ACH Commerce") in April 2005 for $9.6 million, of which $1.1 million was
paid upon the second anniversary of the acquisition in 2007 in accordance with the terms of the acquisition. After evaluating the
Company's market opportunity for certain of its electronic payment services, we announced a decision in December 2008 to exit the ACH
Commerce business. In connection with this decision, we recognized an $8.8 million impairment for all of the goodwill resulting from the
acquisition. The Company will continue to utilize the automated clearing house platform obtained through the acquisition to support our
other businesses and for internal use.
Game Financial Corporation — During 2007, we paid $3.3 million in connection with the settlement of a contingency in the 2004 Sales
and Purchase Agreement related to the continued operations of Game Financial Corporation with one casino. We recognized a loss from
discontinued operations of $0.3 million in the Consolidated Statements of (Loss) Income in 2007, representing the recognition of a
deferred tax asset valuation allowance, partially offset by the reversal of the remaining liability for contingencies which expired.
CAPITAL TRANSACTION
On March 25, 2008, we completed the Capital Transaction, pursuant to which we received an infusion of $1.5 billion of gross equity and
debt capital to support the long-term needs of the business and provide necessary capital due to the investment portfolio losses in late
2007 and the first quarter of 2008. The net proceeds of the Capital Transaction were used to invest in cash equivalents to supplement our
unrestricted assets and to repay $100.0 million on our revolving credit facility. Following are the key terms of the equity and debt capital
issued.
Equity Capital — The equity component of the Capital Transaction consisted of the private placement of 760,000 shares, in aggregate, of
Series B Participating Convertible Preferred Stock (the "B Stock") and shares of non-voting Series B-1 Participating Convertible
Preferred Stock (the "B-1 Stock")(collectively, the "Series B Stock") to affiliates of THL and affiliates of Goldman Sachs, respectively,
for an aggregate purchase price of $760.0 million. After the issuance of the Series B Stock, the Investors had an equity interest of
approximately 79 percent; this equity interest has increased to 80 percent as of December 31, 2008 from the accrual of dividends during
the year. 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.
The Series B Stock pays a cash dividend of 10 percent. At our option, we may accrue dividends at a rate of 12.5 percent in lieu of paying
a cash dividend. Dividends may be accrued for up to five years from the date of the Capital Transaction. After five years, if we choose to
not pay the dividends in cash, dividends will accrue at a rate of 15 percent. The Series B
48